22

International Labor Migration 22

As measured by its per-capita income, Nepal is one of the poorest coun-
/// Series edited by Béatrice Knerr ///

International Labor Migration and Livelihood Security in Nepal

tries in the world, with large parts of its population trapped in poverty
within a stunning, but difficult to control natural environment. Under
these conditions, since the wake of the 21st century, international labour
migration and the associated remittances of large amounts of foreign
exchange have rapidly gained influence on the country’s economic and
social development, triggered by internal disturbances, in particular eco-

Considering the Household Level

nomic downturn and political upheavals, as well as external dynamics
which boosted an uprising international demand for unskilled labour.
While there is hardly any basic dissent about the short- to mid-term
po­sitive growth effect for Nepal’s economy, surprisingly little is known
about the consequences of this form of livelihood security at the indi-
vidual household level, apart from some anecdotal evidence, although
neither policy makers nor NGOs may effectively craft their strategies
without considering this phenomenon. Béatrice Knerr (Ed.)
This book was developed from an Alumni Workshop held in Kathmandu
in 2015, where, focusing on this knowledge gap, wide-ranging original
research about the consequences of family members’ absence and the
receipt of remittances was presented. Moving on from this starting
point the authors further elaborated their work to make it accessible to
a broader public, and exploitable as a resource for policy making and
follow-up research.
International Labor Migration
I addition, this volume includes detailed facts and figures about out-
migration from and inflow of remittances to Nepal. With a view to
and Livelihood Security in Nepal
long-term development implications of international migration it also
considers the gain of knowledge and access to international academic
networks brought into the country by returned scholars.
Considering the Household Level
The editor of the volume, Béatrice Knerr, is a professor of development
economics, affiliated to the University of Kassel, Germany, where, until
2015, she was heading the Department of Development Economics,
Migration and Agricultural Policy (DEMAP). Afterwards she has served
as guest professor at the Universidad Autonoma de Yucatan (UADY) in
Merida, Mexico, and at the College of Economics of Hue University,
Vietnam. Presently she is on contract with the Brawijaya University
of Malang, Indonesia, where she is joining research projects on rural Béatrice Knerr (Ed.)
development and teaching various modules in the Economics Faculty. As
an expert in the implications of labour migration on the development of
low- to middle-income countries she has published and edited around
30 books and 100 journal articles and book chapters.

ISBN 978-3-86219-944-0

kassel
9 783862 199440 university
press
International Labor Migration
Vol. 22

Editor: Prof. Dr. Béatrice Knerr

Béatrice Knerr (Ed.)

International Labor Migration

and Livelihood Security in Nepal
Considering the Household Level

kassel
university
press
Bibliographic information published by Deutsche Nationalbibliothek
The Deutsche Nationalbibliothek lists this publication in the Deutsche Nationalbibliografie;
detailed bibliographic data is available in the Internet at http://dnb.d-nb.de.

ISBN 978-3-86219-944-0 (print)

ISBN 978-3-86219-945-7 (e-book)
DOI: http://dx.medra.org/10.19211/KUP9783862199457
URN: http://nbn-resolving.de/urn:nbn:de:0002-49453

2017, kassel university press GmbH, Kassel

www.upress.uni-kassel.de

Cover illustration: Tomasz Henning

Cover layout: Bettina Brand Grafikdesign, München
Printed in Germany by docupoint GmbH, Barleben
 i

Acknowledgements

The present volume has been developed from presentations given on the
occasion of the Alumni Workshop entitled “Research on Migration from
Nepal” held in Kathmandu on 19th to 20th March 2015 with the intention to
bring together Nepali researchers and graduates who were occupied with
questions of international migration and who had returned to Nepal after their
studies in Germany. In addition we invited a number of national migration
experts and members of associations and institutions related to the topic.

The workshop turned out to be very rewarding in terms of original research

presented as well as engaged and productive discussions. On that basis it was
decided to publish the contributions in a specific volume of the “Labour
Migration Series”. Until this book was ready to be printed a great deal of
additional work was necessary, in several cases it meant transforming a
handful of slides into a coherent article, with supplementary material to be
found and the fulfilling of formal requirements with regard to scientific
proficiency. All this had to be done besides heavy professional workloads we
all had to shoulder and interrupted by the vagaries of a horrible earthquake
which put a halt to many activities over a longer period of time.

As authors of the book, we are grateful to numerous persons and institutions

who added value and support to our work.

First, we would like to mention the University of Kassel. Without its

budgetary support neither the Alumni Workshop nor this publication would
have been possible.

Key persons in the organization of the Workshop in Kathamdu were Dr.

Amina Maharjan and Ms. Soma Kumari, who on a voluntary basis engaged in
a broad variety of activities which were necessary on site to put the idea of
that Workshop into practice.

Special thanks go to the German Embassy in Kathmandu, and namely to the

Ambassador, His Excellency Matthias Meyer, for addressing a personal
welcoming speech and giving us the honour of his presence, thus emphasizing
the lasting relationships between Germany and the Nepali Alumni graduated
from German institutions of higher education.
 ii

Numerous volunteers lent a helping hand over the workshop, for smaller and
bigger tasks, from distributing material to ad-hoc technical assistance. We
really appreciate their engagement, although we are not able to name all of
them because they just were showing up when realizing they could be useful.

With regards to the book publication, our sincere thanks go to Mr. Krishan
Range for his patient and thorough proof reading of the manuscripts; to Mr.
Sunil Kafle for his reliable support in organizing the book, running the
correspondence with the authors and from time to time getting emerging
disorders under control; and also to Ms. Angela Döring who supported us in
with formatting and bringing the reference lists in shape.

We hope that all of these efforts have led to a result which can be used as a
valuable input for policy makers, researchers, development institutions, and
the wider interested community.
 iii

Table of Contents

Acknowledgements………………….………...…….……………………….I

Introduction…………………………………………………….…………..…1

Part I: Factual Context………………...………………….…..…………….7

Nepal. A short country profile …………………………….………………….9
Beatrice Knerr

Nepalese in the global labour market of the 21st century ……………….…..27

Beatrice Knerr

International labour migration and remittances in Nepal: an overview…..…63

Beatrice Knerr

Part II: Remittances, Living Standards and Food Security…….…….…81

Determinants and impacts of international remittances on left-behind
families in rural regions of Eastern Nepal……………………………….…..83
Ranjita Nepal and Béatrice Knerr

Measuring the impact of migration on households’ food security………....143

Amina Maharjan, Siegfried Bauer and Beatrice Knerr

Remittances and long-term livelihood security in the mountains of Nepal..113

Karishma Wasti

Impacts of labour migration and remittances on rural poverty and

income distribution. The case of Bishankhunarayan VDC……………….163
Sanjeeb Maharjan, Beatrice Knerr and Amina Maharjan.

Part III: Intangible Costs for Left-behind Family Members…………187

Social and psychological costs of labour migration in rural areas of
Nepal……………………………………………………………………….189
Rosy Pun
 iv

Part IV: The Nexus between the Development of Human and

Social Capital and Migration……………………………...……………..217
Returnee organizations of highly qualified in Nepal: integrating human
capital and social capital.
The Nepal German Academic Association (NEGAAS) ………………….219
Roshana Shrestha and Béatrice Knerr

The Youth and Small Enterprise Self-Employment Fund (YSEF):.…..…..239

A government initiative to offer alternatives to out-migration
Punya Prasad Regmi, co-authored by Beatrice Knerr

About the Contributors ….……………………………………………...…259

 1

Introduction
Since the early 1990s, labour migration to foreign countries has rapidly
gained influence on Nepal’s economic and social development, essentially
triggered, on the one hand, by internal developments, in particular economic
downturn and political upheavals, and, on the other hand, by external
dynamics, in particular construction booms and other sources of uprising
demand for unskilled labour in the Gulf Cooperation Council (GCC) and
South East Asian (SEA) countries. It is supported and further driven by
underlying structural issues, such as marginal smallholder subsistence
farming, wide-spread poverty, and large-scale domestic unemployment.
Consequently, in the early 21st century, numerous rural households in Nepal
are economically depending on members earning money far away from home,
with a broad scale of far-reaching implications for individual lives.
This volume turns to economic and social consequences of this phenomenon.
Economic impacts are essentially attached to the outflow of productive labour
force and the inflow of workers’ remittances. At the same time, the departure
of labour force of various skill levels has profoundly changed the social fabric
in Nepal (GoN, 2014). Meanwhile, neither policy makers nor NGOs may craft
their strategies without considering this dynamic factor. Due to the
importance it has gained within the Nepalese society, the government has
established a number of formal regulations, official programs, and bilateral
agreements with migrants’ destination countries to take influence on the
process. Protecting migrant workers’ rights and at the same time enhancing
their chances on the international labour market has major priority. Still, the
future prospects international labour markets hold for Nepalese are insecure
due to volatile global frame conditions. The addressed aspects are deepened in
the following sections.
 2

The book is organized into four parts. The editor, Beatrice Knerr, starts with a
description of the global conditions framing the out-migration of Nepalese
work force (Part I), which comprises a brief country profile of Nepal,
including geographical, economic, social and political characteristics of the
country’s development, followed by an overview of Nepal’s role in the
international labour market, and the presentation of facts and figures about the
out-migration of people from and inflow of remittances to Nepal.
Part II focuses on the nexus between monetary remittances on the one hand,
and living standards and food security on the other hand whereby poverty
issues play a prominent role. Introducing this part, the paper by Ranjita Nepal
and Beatrice Knerr connects determinants and impacts of remittances at the
family level. Following the theory of the New Economics of Labour
Migration (NELM), which considers households as the appropriate unit of
analysis, and emphasizes that migration and remittances decisions are taken
jointly. It examines both by using primary data collected through a household
survey in Eastern Nepal, The results demonstrate that the likelihood of
receiving remittances is significantly related to the number of adult males in
the household, the gender of the household head, the ethnicity, the family
structure and the quality of the inhabited house; and that remittances had a
significantly positive impact on food and health care expenditures.
As food security is closely related to the extent of poverty, remittances play a
key role in attaining it. Amina Maharjan, Siegfried Bauer, and Beatrice
Knerr investigate how to measure the impact of migration on households’
food security in this context. They start by clarifying the considerable
differences existing among Nepal’s agro-ecological belts and development
regions with regard to the extent of migration, as well as its destinations.
While the Far-Western and Mid-Western development regions people mostly
migrate to India, as seasonal or circular migrants, from the Western, Central,
and Eastern regions, they typically move to overseas destinations for periods
 3

of two to three years (DoFE 2014). Labour migration to overseas destinations

implies high returns but also high costs while going to India for work is
comparatively cheap but offers just low-paid jobs. In both cases, most of the
remittances are spent on basic needs, whereby food security is a primary
objective, thus demonstrating the crucial importance migration and
remittances hold for livelihood security. However, measuring this impact in
different migration contexts requires careful selection of indicators and
methodology which is in the centre of this paper.
Abundant evidence demonstrates that migrants’ remittances have improved
the material living standard of countless Nepalese families, and various
empirical studies, as for example by Lokshin et al. (2010), Thieme and Wyss
(2005), and Bhadra (2007), have indicated positive impacts of labour
migration on poverty reduction in the country. In fact, the considerable
decline of the poverty rate from 42% in 1995/96 to 21% in 2010/11 has been
mainly attributed to the expanding inflow of remittances (CBS, 2005; CBS,
2012a). Therefore, labour migration in Nepal is perceived as a major way out
of deprived household conditions, and remittances are considered an
important instrument of national poverty reduction. Following this up,
Karishma Wasti investigates the origin, amount and use of remittances sent by
international labour migrants to Nepal’s North Eastern mountainous region,
with a focus on their role for long-term livelihood security. Her survey
among remittances receiving households indicates that Nepal’s 21st century
migration trends, which essentially comprise low-skilled workers moving to
high-income Asian and Middle-East economies, tend to place the migrants
into economically vulnerable situations. The migrants’ salaries depend on
their occupation, training and destination, which, together with the migrant’s
saving rate determine the amount which could be sent home. However, what
is finally disposable for the household’s own ends might be considerably
below the quantity put aside by the migrant. A major leakage occurs by the
 4

high fees which recruiting agents who exert strong control over the migration
process are charging. In most of the investigated cases, remittances are just
sufficient to support the households’ basic needs, while a high share is spent
on repaying loans to cover the migration costs. Hence the returns from
temporary migration generally would not be sufficient to pull the households
out of their poverty status.
Approaching the questions how far and under which conditions remittances
contribute to poverty reduction among the most marginalized strata of the
population, and what implications migration and remittances have for income
distribution and relative poverty, Sanjeeb Maharjan, Beatrice Knerr and
Amina Maharjan show the relationships between migration, remittances, and
poverty are more complex than might appear at first sight, however. They
address these subjects by a comparative empirical study based on primary
data collected in a village community of Lalitpur District, characterized by a
high share of its population living below the poverty line, and at the same
time a high rate of outbound labour migration. Their results emphasize the
strong dynamic which the inflow of remittances initiates in such communities.
While on the one hand, they contribute to significant poverty reduction among
the migrants’ families, on the other hand those without migrants and
remittances feel increasingly deprived, thus tending to push a self-
perpetuating cycle of migration. At the same time not all needy households in
the community possess the resources to successfully follow this strategy,
leaving a poverty-trapped segment of the population behind.
Part III turns to the non-material costs of labour migration and the mental
hardships which the long-term absence of a family member inflicts on the left
behind relatives. Rosy Pun addresses this highly relevant but still neglected
matter that during the separation periods the migrants’ family members have
to make considerable adjustments, and that labour migration usually involves
substantial social and psychological costs. For many, it takes a toll on their
 5

life. Rosy Pun’s study also highlights the adjustment strategies applied by the
left-behind, revealing that in particular age, education, and household type
decisively influence the coping mechanisms adopted, and that the migrants’
gender plays a crucial role for the type of suffering endured. She concludes
that these results should convince governments and civil society to take
effective measures to mitigate the griefs at the origin.
In Part IV, national-level activities in Nepal, targeted to build up and make
use of human and social capital for development which may contribute to
reduce out-migration are presented.
Referring to the potential contributions of returned academics, Roshana
Shestra and Beatrice Knerr focus on the outstanding role social capital can
play in this context. Nepal, in addition to large numbers of low-skilled
workers, has been sending an increasing number of students abroad who,
upon their return, might contribute decisively to the country’s development by
their human as well as national and transnational social capital. The essential
role both forms can play for economic development is undisputed among
scientists and practitioners. On top of new knowledge and competencies
returned academics usually transfer social capital, thus serving as keys for
networking with the former host country. Returnee organizations play a
prominent role in this context as, by enhancing the networking potential, they
bind together scattered connections and relations; create synergy and leverage
effects; offer catalysts for research activities; contribute to strengthen
diplomatic ties; and facilitate cultural and information exchange. Roshana
Shrestha and Béatrice Knerr consider the role academic returnee
organizations in Nepal play for integrating human capital and social capital,
through an empirical focus on the Nepal German Academic Association
(NEGAAS), an association of highly-qualified returnees from Germany. The
article investigates how far the set goals have been achieved, and also
 6

identifies some bottlenecks which inhibit it from further unfolding of its

potential.
Focusing on the underlying causes of out-migration, namely large-scale youth
unemployment, Punya Prasad Regmi, co-authored by Beatrice Knerr presents
the Youth and Small Entrepreneur Self-Employment Fund (YSEF) which has
been established by the Nepalese government in 2009 with the intention to
support young jobless people in becoming self-employed by providing
investment funds via different institutions and developing their competences
in relevant training modules. The article gives an overview of YSEF’s
mission, vision, objectives, strategies, experiences, and prospects of fund
utilization; elaborates its perspectives; and suggests further improvements.
These contributions demonstrate that the migration process implies complex
challenges at the household level in terms of the migrants’ families’ well-
being, governance, workers' protection, development linkages, training, care,
and international cooperation. Yet, it also becomes clear that there is
considerable potential for improvement on all levels which may realistically
be attained by enhancing the knowledge, motivation and assertiveness of the
actors involved.

Key words: International migration;, labour migration; remittances; Nepal;

poverty; livelihood security; human and social capital..
 7

Part I

Factual Context
8
 9

Nepal: A short country profile

Beatrice Knerr

Overview
Nepal, land-locked in the Himalayan region, is one of the poorest countries in
the world, with a per capita gross national income (GNI) of US$ 730, placing
it on rank 205 out of 228 nations (World Bank 2016a), and a Human
Development Index (HDI) of 0.5481, corresponding to rank 145 out of 186
measured countries (UNDP, 2016a2). Its economic progress has been
hampered by a difficult geographical terrain and long-term political
instability. The 2015 earthquake – one more catastrophe in Nepal’s long
history of natural disasters – imposed an additional setback on the country.
Nepal’s population grows at a rate of 1.2% p.a.; its median age is 23.6 years.
Farming is the main occupation of 65% of the economically active. It sustains
more than 80% of the households, while contributing just about 33% of the
gross domestic product (GDP), which demonstrates the agricultural sector’s
low productivity3. Nepal is characterized by huge geo-climatic, demographic,
ethno-cultural, and biological diversities which makes infrastructural
development, in particular road access, a most expensive challenge. Under
these circumstances international labor migration and remittances transfers
have developed into essential livelihood strategies for a large share of the
population and into a backbone of the economy. This article provides factual
background information about the context in which the related processes take
place.

1
Calculated by the method of using a geometric mean introduced in 2010 (UNDP 2014a)
2
These data are of 2014.
3
Data based on ILO (2016) and World Bank 2016a.
 10

Geography4
Nepal is - on its average - the highest situated country in the world, with more
than 40% of its area is located above 3,000 m asl. Yet, while in the North and
the East a large part of the Himalaya mountains can be found (including seven
of the ten highest mountains of the world, among them the peak of the Mount
Everest with 8848 m asl the highest point on the globe), the country’s lowest
point near Kencha Kalan in the South reaches just 70 m asl.
Nepal comprises five climatic zones, broadly corresponding to their altitudes:
the tropical and subtropical zone below 1,200m; the temperate zone at 1,200
to 2,400m; the cold temperate zone at 2,400 to 3,600m; the subarctic zone at
3,600 to 4,400m; and the arctic zone above 4,400m. On an area of 147,181
km2, it is divided into five physiographical regions namely: High Himalayan,
High Hills, Middle Hills, Siwalik, and Terai (see Fig.1). They also represent
different agro-ecological zones, where agro-ecosystems vary markedly by
physiographic belts: Mountains (35%), Hills (42%) and Terai (23%). Half of
Nepal’s inhabitants (50.3%) live in the Terai, 43 % in the Hill and 6.7 % in
the Mountain region (CBS, 2012). These three sub-formations also roughly
circumscribe the nation’s socio-economic, cultural and ethnic structures.
Terai. The Terai, with an altitude of 70 to 150 m, forms the Nepalese part of
the Ganges valley. Since the mid-20th century, it has developed into an
increasingly important economic and settlement area. Fertile flat lands which
are less prone to erosion, a year-round frost free climate, and favourable
irrigation possibilities make it the country’s agriculturally most valuable
region. Also, almost all of Nepal’s industrial plants outside the Kathmandu
valley are located here. The country’s only East-West road link, the
Mahendra-Highway, is running through the Terai and it possesses nine
domestic airports with direct connections to Kathmandu.
4
Details about Nepal’s geography can be found, for example, in Shrestha (2007) or on-line
at Encyclopedia Britannica (2016).
 11

The Hills (Midlands). The Siwaliks and the Mahabharat-chain form the
passage from the Terai to the Hills (also called “Midlands”) which reach
heights up to 3000m and are characterized by a deeply structured relief.
Micro-climate, soils and geomorphology vary within relatively small spaces,
resulting in widely differing conditions for settlement and agriculture. Due to
their rough surface the Midlands are extremely traffic-adverse. Only the
Kathmandu- and the Pokhara-Valley and a few communities in the mountains
dispose over road connections. Nevertheless, the Midlands are the country’s
most anciently populated core region, and the site of its capital and biggest
city Kathmandu which possesses the country’s only international airport.
The Mountains. Almost all permanent settlements of the Mountain regions are
located in its valleys; summer settlements with grazing reach up to 5,000 m.
The extremely high relief energy and the heavy Monsoon rains (with more
than 5,000 mm p.a.) on the Southern slopes cause land erosions and make
farming tedious. The Northern slopes of the Himalaya’s major mountain
range, in contrast, receive less than 200 mm of rainfall p.a., so farming is
almost impossible here. Overall, the high mountains area is a food deficit
region. Forest economy is a main pillar of the subsistence economy, while the
major external source of income is tourism. The region is connected to the
outside world by four domestic airports, but roads are almost non-existent. As
a result, walking is the residents’ most common way of moving. Altogether,
the Mountains are economically less developed than the rest of the country.
This applies in particular to the Western part, where the HDI is 25% below
the country’s average (UNDP 2016b).
 12

Fig. 1: Administrative and Ecological Divisions of Nepal

Economy
Over the early 21st century, Nepal’s GDP increased considerably, from US$
5.494 billion in 2000 to US$ 21.195 billion in 2015 (in current US$), although
its growth rate of 5.1% from 2013 to 2014 dropped to 3.0% over the
following year which was marked by a devastating earth quake (ADB, 2016).
During the same period, the per-capita GDP went up by the threefold, from
US$ 231 to US$ 743 (World Bank 2016a).
In 2014, the agricultural sector supplied 30%, the industrial sector 14%, and
services 53% of GDP (CBN 2016; World Bank 2016). Agriculture’s major
products are rice, corn, wheat, sugarcane, root crops, milk, and water buffalo
meat. The industrial, manufacture, and service sectors comprise mainly
tourism, carpet and textile manufacturing, cigarettes, cement and brick
production, and small rice, jute, sugar and oilseed mills (CIA, 2016).
 13

The agricultural sector is dominated by subsistence farming. Commercial

farming is restricted by land fragmentation; rough geophysical conditions;
insufficient and unreliable availability of inputs, inadequate access to capital
and credits, absence of irrigation facilities, poor access to modern
technologies, and lack of technical support. Farmers have only limited access
to improved seeds, new technologies, and market opportunities (USAID,
2017). Nevertheless, Nepal’s food production has shown a steadily increasing
trend since the 1960s up to 2015 (FAO, 2017; FAO and GoN, 2013).
Still, although the government has made food security a national priority, the
country is not able to produce sufficient and adequate food for its citizens.
According to FAO statistics, the prevalence of undernourishment in Nepal is
8% for the average of the years 2013-2015, down from 22% for the years
2001 to 2003 (FAO, 2017). Even so, in 2014, USAID wrote: „Stagnant
growth and political instability have contributed to acute food shortages and
high rates of undernutrition, mostly affecting vulnerable women and children
in the hills and mountains of the mid- and far-western regions.“ (USAID,
2014). 41% of the children below five years are stunted, as announced by
Nepal’s Ministry of Health (MOHP et al., 2012).
More than 25 % of Nepal’s population live below the national poverty line
(ADB, 2017)5. The World Bank estimated the country’s Gini index at a value
of 32.8 in 2010: its most well-to-do 20% received 41.4% of the total national
income, while the poorest 20% had to live with just 8.3% of it (World Bank
2016c)6.
In 2014, Nepal exported goods and services valuing US$ 2,411 million and
imported at a value of US$ 8,073 million, resulting in a negative trade

5
According to the World Bank definition, poverty is defined as living on less than US$2
per day.
6
The second quintile (from below) received 12.1%, the third 16.2% and the fourth 21.9%.
 14

balance of US$ 5,662 million7 (WITS, 2017). The country’s import value
index8 increased from 100 in 2000 to 481 in 2014 (414 in 2015), while the
index of its export value went up from 100 to 111 (82 in 2015) (WITS,
2017). Its major export commodities are textiles, carpets, non-alcoholic
beverages, apparels, staple fibres, flat-rolled iron, coffee, tea, and spices. Its
top imports are refined petroleum, silver, semi-finished iron, and gold.
Imports come mainly from India (with about 65% of Nepal’s import value in
2014), China (with 12%), and the UAE (with 5.5%), while its exports went
mainly to India (with 65% of the export value in 2014), the USA (with 8%)
and Germany (with 4%) (WITS, 2016). Nepal’s major single source of
foreign exchange are remittances sent by labour migrants from abroad; in
2014 they reached more than US$ five billion, corresponding to 30% of the
country’s GDP (World Bank 2016b).

Demography
Nepal’s latest census of 2011 recorded slightly more than 26 million
inhabitants; the UN and the World Bank put Nepal’s population at 31 million 9
in 2015, up from 23.151 million in 2001, 9.41 million in 1961, and 5.6 million
in 1911 (Pantha & Sharma, 2014; CBS, var. years; UN, 2016; World Bank,
2016a), i.e. an increase by about the five-fold within one century. The
country’s population growth started to accelerate in the early 1940s and
reached 1.2% in 2014.

7
In the exceptional earthquake year 2015, imports amounted to US$ 8,830 million and
exports to US$ 2,244 million (WITS 2017).
8
The export/import unit value index characterises changes in the price level of exported
and imported commodities within the reporting period against a base period.
9
According to UNICEF (2016b), between 2010 and 2015, 42% of the births of children
under the age of five in Nepal have not been registered (with an almost equal share among
the poorest and the richest quintile, and among girls and boys. This renders exact
indication of population size impossible.
 15

Nepal has one of the youngest populations in the world, with 34.2% being
below 14 years old, and just 8.1% elder than 60 (CIA 2016); a median age of
23.6 years (CIA, 2016; data of 2015); around 70% being below 35 years; and
a life expectancy of 66.2 years (UN 2016; ILO Country Office for Nepal,
2014). The total dependency ratio is 61.8%, composed of a youth dependency
ratio of 52.9% and an elderly dependency ratio of 9% (CIA, 2016).
Nepal’s population is predominantly rural, although the country is undergoing
rapid urbanization, driven by economic and political conditions. The share of
the urban population is 18.6% (data of 2015), with more than one million
living in Kathmandu (CBS, 2016); in 1970 this share was just 4% (World
Bank, 2016). The further urbanization process is confined by a lack of
effective planning and large and growing deficits of efficient infrastructure
(World Bank 2013).
The overall sex ratio (i.e. number of males per 100 females) is 86, according
to the 2010-2011 NLSS (CBS, 2016; see Annex 1 for Nepal’s population
pyramid). It is lowest in the 20-29 years age group, indicating that a high
proportion of the young men are absent. Rural regions (with 84) have a
significantly lower sex ratio than urban areas (with 93). The low proportion of
males in the rural area’s working age group most probably is due to higher
out-migration to urban centres and to abroad. More than 25% of the country’s
households were female-headed in 2011, with only slight differences between
urban and rural regions. Ten years before this share was just around 15%
(GoN, CBS, 2012)

Religion and ethnicity

The dominant religion in Nepal is Hinduism (with an estimated 82% of the
population being Hindus) and Buddhism (with 9%). Other religions
comprising more than 1% of the population are Islam, Kirant and Christianity
(CBS, 2015).
 16

The Nepalese society is segregated along ethnic/caste lines which determine

social belonging, solidarity, and identity. 16.6% belong to the group of
Chhetri, 12.2% to the Hill-Brahmin, 7.1% are Magar, 6.6% Tharu, 5.8%
Tamang, and 5% Newar. While the first two groups are found all over the
country, the others concentrate in certain regional pockets. (CBS, 2015)

Environmental degradation
Nepal’s population, particularly the rural poor, are directly dependent on
natural resources for their survival, and a significant share of the economy is
rooted in climate-sensitive sectors such as agriculture, forestry, and eco-
tourism. In the 21st century, these resources are increasingly at risk as the
country struggles with substantial environmental problems, ranging from
impacts of climate change to domestically-caused vagaries. Although
comprehensive scientific results, based on hard facts, are not available,
selective investigations and anecdotic evidence speak a clear language.
Global warming is seriously affecting Nepal’s space, and temperatures are
rising at a rapid rate (Devkota, 2014; ICIMOD, 2011). Signs of changes in the
onset and retreat timings of the monsoon rains, as well as in the number and
frequency of extreme precipitation events are evident (IWMI, 2016: Singh et
al. 2011). As the snow-periods after winter have shortened, less water in the
pre-monsoon spring season is available. No snow usually remains at below
2,400 m to provide meltwater over several months, and farmers report
“delayed and erratic rainfall during the rainy season followed by prolonged
dry periods” (Braasch, 2016). High-intensity rainfalls have resulted in heavy
floods, landslides, and soil erosion, and the negative impacts of droughts
which have occurred in many parts of the country, are evident in forests,
water resources, agriculture, human health, and biodiversity.
Also, man-made pollution is contributing to the toll. So, Braasch (2016)
observed: “In Kathmandu, rivers like the Baghmati and its tributary the
 17

Vishnumati are public and industrial dumps of every kind of waste, despite
frequent public awareness campaigns and periodic clean up attempts.”
Although Nepal is rich in water, with more than 6,000 rivers and the monsoon
rains, more than a quarter of the population has no access to safe drinking
water, and even at the Himalayan foothills, where rivers and groundwater are
less polluted than in the cities, seasonal water shortages and lack of safe in-
home water supply affect most people (IWMI, 2016).
Emphasizing the country’s vulnerability to climate change the Climate and
Development Knowledge Network (CDKN) estimates that the economic costs
caused by current climate variability and extreme events in Nepal are
equivalent to 1.5 to 2% of the country’s annual GDP, and could increase by
an additional 2 to 3% of GDP p.a. by mid-century, requiring complicated
decision-making in a changing environment due to amplifying uncertainties
(CDKN, 2014). With regard to agriculture and focusing on maize, wheat, and
rice - the three main crops grown in Nepal – potentially high impacts are
expected in the Terai. By the 2070s, net losses in Nepal are projected to
amount to around 0.8% of current GDP p.a., or US$140 million p.a. (in
current prices). For the hydroelectricity sector which is essential for Nepal’s
energy supply a CDKN scenario predicts an increase in investment costs of
US$ 2.6 billion from 2015 to 2050 (in terms of present value) due to a decline
in dry season flows. The analysis of the future impacts of climate change on
water-induced disasters found an enhanced risk of flood damage, entailing
additional direct costs of around US$ 100–200 million p.a., equivalent to 0.6–
1.1% of current GDP p.a. by mid-century.
Several national and international programs are trying to fight the causes and
consequences of Nepal’s environmental problems, like the National
Adaptation Programmes of Actions (NAPA) (GoN, Ministry of Environment,
2010); the USAID’s Initiative for Climate Change Adaptation (ICCA) Project
(USAID, 2016b); the UNCDF’s Local Climate Adaptive Living Facility
 18

(LoCAL) (UNCDF, 2016), or the Nepal Climate Change Support Programme

(NCCSP) which was started with the aim of equipping the poorest and most
vulnerable in Nepal with the ability to adapt to the effects of climate change
(UNDP, 2016a) .

Education
The literacy rate10 among Nepal’s population is 66%, with a significant
difference between males and females: while the male rate is more than 76%,
the female reaches just 57.5%. With its average Nepal is ranked at position
194 out of 215 countries in the world (CIA, 2016). Important progress has
been made since 1991, when the national literacy rate was only 39.6% (54.5%
among males and 25% among females). There is also a striking difference
between urban and rural regions: while in urban areas the literacy rate is
82.2% (up from 66.9% in 1991) it comes up to 20%age points less 62.5% in
rural areas (up from 36.8% in 1991)11 (CBS, 2011).
The primary school participation was 95% between 2008 and 2012, and for
secondary school, it was 66% for females and 74.2% for males (UNICEF,
2016).

Labour force
About 75% of Nepal’s labour force is working in agriculture; 7% in the
industrial sector; and 18% in services (World Bank, 2016a). Over the early
21st century, each year around 400,000 persons entered into the labour market,
but employment opportunities are not expanding fast enough to absorb the
increasing supply (ILO, 2014). As the private sector does not demonstrate
sufficient capacity and dynamism to create sufficient jobs, but instead is

10
Defined as the share of those above 14 years of age being able to read and write in the
total population above 14 years.
11
The literacy rate of 1991 refers to the population aged five years and above; in 2011 it
referred to the population of six years and above.
 19

subject to many growth obstacles, like an unfavourable investment climate,

poor regulations, lack of incentives, growing labour militancy, weak rules of
law and, most prominently, an unstable and uncertain political environment
(UN, 2016; UNDAF, 2015), many remain stuck in the agricultural and the
service sectors at low levels of productivity. Most of those having a job
receive payments which are so low that it is difficult to be food secure, to
access necessary health care, and to provide adequate schooling to the
children12.
More than 90% of Nepal’s economically active population are involved in the
informal economy, implying salaries below the minimum wage, lack of
employment security and of access to public benefits, hardly any protection
against abuse from employers, and poor working conditions. (ILO, 2016)
Under these conditions, a large share of the country’s labour force has opted
for earning an income abroad for restricted periods of time, and their number
is increasing every year. In 2014 more than 520,000 labour permits were
issued to Nepalese planning to work abroad, 95% of them to males (GoN,
2015); in addition, a large but unregistered number of Nepalese are working
in India; the World Bank estimated them at 867,000 persons while other
sources put it as high as 1.7 million in 2010 (UN Nepal Information Platform,
2016).
Nepal also steadily loses a significant part of its highly-qualified labour force,
many of them definitely. An increasing number of young people with higher
education leaves the country every year for working and/or studying abroad,
and a large share of them do not return. So, for example, Nepal and Knerr
(2015) in a survey among Nepalese students in Germany, found that around

12
For example, the minimum monthly salary of tea estate workers for FY 2015/16 is about
US$60, and the minimum daily wage is about two US$. For FY 2016/17 these rates
should increase to about US$ 67 (NPR 7,075), resp. US$2.40 (NPR253) (Library of
Congress 2016). In 2016, the minimum monthly salary for employees in other
enterprises is about US$ 59 (NPR 6,205), plus a cost of living adjustment of about three
US$, and the daily wage rate for the other enterprise workers is US$ 3.74.
 20

two-third of the respondents did not intend to return, and this share was
particularly high among those enrolled in engineering and technology and in
medicine. Nepal also suffers from a major loss of health personnel, namely
trained nurses, who easily find employment in high-income countries, like
Great Britain (Adhikari, 2011), while at the same time they are badly needed
at home in particular in the country’s more remote areas (Harris et al., 2011).

Political framework
For decades, internal conflicts and political instability have limited Nepal’s
economic growth (Riaz & Basu, 2010). The frequent changes in government
have severely obstructed the country’s progress in many respects. Until 2007,
when Parliament approved an interim constitution13, Nepal was a
constitutional monarchy, and since then is a Federal Parliamentary Republic,
with the president being the head of state. In 2008, the constituent assembly (a
transitional legislature) formally and finally abolished the monarchy, and the
new state structure was confirmed by the newly elected constituent assembly.
But also after the constitution’s official proclamation, the country has
remained politically unstable. In August 2016, Nepal’s parliament elected a
new prime minister14, the country’s 25th change in leadership in 26 years. His
predecessor had resigned just after nine months in office. Pressing national
issues are thus overshadowed by Nepal’s power struggles, as “[t]he game of
government toppling and forming still dominates the national political arena.”
(Bhattarai, 2016). Hence, one of the country’s major challenges is building
foundations for a stable nationhood, notably a robust system of good
governance and a sustainable economic development strategy. The

13
The constituent assembly was charged with drafting a new Constitution by May 2010,
the deadline that was subsequently extended after agreement proved impossible to reach.
14
Mr. Pushpa Kamal Dahal
 21

consolidation of democracy and the mitigation of internal conflicts are vital to

its development.
Still, Nepal’s scope of independent decision making is obviously restricted by
its international position. Nepal as a comparatively small and poor country is
sharing a border with China in the North and with India at all other sides.
Both neighbours which are among the most powerful states in the world with
have strong geopolitical interests are exerting far-reaching influences on
Nepal’s political and economic scope of action.
Transparency International put Nepal’s corruption index at 27 points in 2015,
thus placing it on rank 130 out of 168 countries15 (Transparency International,
2016).

Development regions
Nepal is administratively sub divided into five development regions (Eastern,
Central, Western, Mid-Western, and Far-Western), 14 zones, and 75 districts
with altogether 59 Municipalities and 3912 Village Development committees
(VDCs).16 The capital Kathmandu belongs to the Central region where nearly
35% of the country’s population are living. The Central, Western and Eastern
regions are better off in terms of human development, poverty, and gender
development indices than the Mid-Western and Far-Western regions (Table
1).

16
New Federal States and other provincial districts, and lower level new boundaries are
reflected on. The country is under the process of developing new constitution of Federal
Republican of Nepal and therefore the current (status 2017) administrative divisions
might be changed.
 22

Table 1: Population and UNDP Development Indicators of Nepal by

region

Development Region Human Human Gender Population

Development Poverty Development size
Index Index1 Index2
Eastern 0.52 33.7 0.51 5,344,476
Central 0.53 35.3 0.51 8,031,629
Western 0.51 33.2 0.51 4,571,013
Mid-Western 0.45 38.7 0.41 3,012,975
Far-Western 0.46 39.0 0.44 2,191,330
Overall for Nepal 0.50 35.4 0.48 23,151,423

1) The HPI concentrates on the deprivation in the three essential elements of human life
already reflected in the HDI: longevity, knowledge and a decent standard of living.
2) The GDI is the ratio of the HDIs calculated separately for females and males using the
same methodology as in the HDI. It is a direct measure of gender gap showing the female
HDI as a percentage of the male HDI.

Source: based on UNDP, 2014

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 26

Annex

Fig. A1: Nepal’s population pyramid

Source: MOHP (2012): 21

 27

Nepalese in the global labour market of the 21st century

Beatrice Knerr

1 Introduction
Out-migration from Nepal has expanded dramatically over the early 21 st
century, as an integral part of the world-wide globalization process of which
international labour movements have become a key (IOM 2017). Thus its
prevailing migration and remittance pattern, and through this its economic
development, is strongly determined by the frame conditions set by events on
international labour markets.
Economies of scale, international trade agreements17, and almost unrestricted
capital mobility have supported an unmatched global concentration of
production units which - reinforced by improved access to information – has
attracted workers from economically marginalized regions to growing
production centres and to places where non-tradeables, such as infrastructure,
houses, and services, are developed (World Bank 2009). At the same time the
global hunger for energy flooded oil-exporting countries in the Middle East
with huge amounts of capital which was invested into the fast construction of
infrastructure and buildings, and the increasing wealth also triggered an
expanding demand for services. The resulting demand for mainly low-skilled
labour could not be satisfied by domestic supply. As a consequence, the
number of international labour migrants has soared to unprecedented heights,
whereby the direction of the migratory flows is determined by the interaction
of numerous factors, in particular spatial distance, available infrastructure,
political and cultural links, immigration and emigration policies, political
regimes and actions, transnational social capital, access to information, and
environmental dynamics. How individuals react to these external conditions at

17
This is foremost the WTO Agreement.
 28

the micro-level largely depends on their personal characteristics, like age,

gender, education, risk attitude, income and employment situation, household
conditions, as well as on implicit and explicit family agreements.
International labour markets are sub-divided into those for low-skilled
workforce and those for high-skilled professionals. Individuals involved in the
first segment, where a seemingly unlimited reservoir of workers is competing
for available jobs, are prone to violations of basic standards of decent work
and even human rights, while those acting in the second segment are courted
by employers of economically advanced countries in a global race for scarce
talents which are an indispensable resource for economic growth in
knowledge economies (Münz, 2014).
Overall, global labour movements are dominated by urbanization processes,
which are accompanied by a general marginalization of rural regions18. Yet, at
the same time, in such regions, as a counter-stream to the outflow of labour
force, migrants’ remittances have become an essential element of economic
development and livelihood security, and numerous low-income countries and
countless families all over the globe dependent on these transfers. In this
context, in particular by development agencies and governments of receiving
countries, remittances are also perceived as a potential source of investment
for long-term income generation, and occasionally the hope is expressed that
through this they may allow families to secure their livelihood at their
traditional places of living and thus contribute to reduce the overall pressure
of out-migration.
The present chapter provides an overview of the major migration routes in the
early 21st century and of Nepalese workers’ position within the global labour

18
In this context, Todaro (1996) potulated that “ [it] is a well-known fact of economic
history that material progress usually has been associated with the gradual but continuous
transfer of economic agents from rural based traditional agriculture to urban oriented
modern industry” (Todaro, 1969:139),
 29

markets, with a focus on its major host countries. As, however, “… data
limitations severely hinder studies of international migration” (Constant &
Zimmermann, 2013:2) models and associated theories are indispensable for
understanding causalities, for assessing future developments and for
conceptualizing analytical frameworks. Therefore, in this article, empirical
observations as well as prevalent macro- and micro-focused migration
theories are presented to offer explanations for the extent, shape, and direction
of migratory movements. Section (2) introduces prevailing theoretical
considerations which help to understand the global forces which drive and
direct international labour movements; section (3) shows facts and figures
about migration and remittances, and takes a brief look at the internal labour
market conditions in Nepalese major host countries; and finally section (4)
concludes and sketches perspectives.

2 Theoretical considerations
A number of theories which try to explain the extent and direction of modern
labour migration, both with regard to global market forces at work, as well as
with regard to migrants’ decisions at the micro level, contribute to understand
Nepal’s position in the international context. The economically maybe most
intuitive19 theoretical explanation rests on the so-called “Neoclassical Theory”
which draws upon the adjustment of supply and demand in free competition:
labour moves from lower-wage to higher-wage regions, travelling counter to
the wage drift20, thus eventually leading to an equilibrium state where wage
rates in all sectors and regions are equalized, and involuntary unemployment

19
This applies at least to free market protagonists.
20
This model assumes that the wage rates correspond to the marginal productivity of
labour; expressed in mathematical terms: w = px dX/dL, where w=wage rate, px = price of
good X; X= units of good X; and L = units of labour.
 30

is absent (Varian, 2014). Migration thus increases labour supply at the

destination and reduces it at the source.21
In reality, however, intervening obstacles disturb the process. In particular,
transaction costs, e.g. resources used for information search and for moving to
another place, are omnipresent. At the international level, legal immigration
restrictions dominate, and in particular low-skilled workers are far from being
in a position to freely travel from one country to another for work
(Zimmermann, 2013). Moreover, labour is not homogenous, and each worker
is unique, and as individual workers significantly differ from each other, e.g.
in skills, knowledge, age, or physical capabilities, there are also considerable
variations in the benefits they could expect from investing into labour
migration. Hence, corresponding self-selections are taking place. Especially
rural out-migration is highly discriminatory: while the younger, better skilled,
higher educated and more productive are disposed to leave for urban and/or
international jobs, the elder and less skilled, as well as women with younger
children tend to be left behind (World Bank, 2008). As a result, over-ageing,
feminization, and declining labour and land productivity are observed in rural
regions all over the world.
Also, wage rates and employment chances are not only determined by
marginal productivities, but also by employers’ and workers’ personal
preferences, social capital and market power; in this context, for example,
gender, ethnic or religious discriminations are wide-spread.
A fundamentally different (but still complementary) explanation of
international migration was offered from the 1960s onwards by the so-called
“historical-structural paradigm on development” (Castles & Miller, 2003). It
21
In the strict model, capital, vice versa, is supposed to be transferred in the opposite
direction. This will result in converging wages in both regions, as explained by the so-
called “factor price equalization theorem” (Samuelsen, 1948; Krugman et al., 2014),
finally abolishing the incentives for migration.
 31

emphasizes that on a global level, structural economic, political and cultural

factors shape the conditions which drive migration, “such as the nature of
modern industrial economies that create demand for particular categories of
workers, political factors such as the availability of visas or work permits for
certain jobs, and social factors like access to social networks” (Striking
Women, 2016). Along that line of thought, Wallerstein’s “World Systems
Theory”, emphasizing that labour movements follow the international
movement of capital, describes migration as an outcome of economic
globalization where corporations operate across national boundaries, and
hence as determined by global economic structures (Wallerstein, 1974).
Related to the historical-structural way of analysis this theory includes a focus
on asymmetric growth22, concentrating on the fact that economic and political
powers are unequally distributed between advanced and less advanced
countries, and that people have unequal access to resources. These imbalances
are reinforced by capitalist expansion. From the historical structuralists’ point
of view, under these conditions labour migration results from disruptions and
dislocations that are intrinsic to the advancement of capitalist accumulation,
and it manifests capitalist penetration and unequal terms of trade between
poorer and richer countries (Massey et al., 1999; De Haas, 2008). Going one
step further, in Wallerstein’s view, the inclusion of the peripheries 23 into the
global capitalist economy implies a drain of their labour force (Wallerstein,
1974 and 1980). According to the “Dependency Theory”, which hypothesizes
that global capitalism enhances the gaps between so-called “developed” and
“underdeveloped” nations, migration destroys peasant societies, destabilizes
their economies and uproots their populations (Baran, 1973; De Haas, 2014).

22
In this respect it is not considered as a full-fledged theory but rather a description of an
observed global phenomenon.
23
Wallerstein in his World System Theory classifies nations according to their degree of
dependency into the capitalist “core” nations, the “semi-peripheral”, “peripheral”, and
isolated nations in the “external” area, not (yet) included in the capitalist system.
 32

With the idea that labour follows capital this theory thus stands in contrast to
the factor price equalization theorem rooted in neo-classical economics.
Basically, both are built on different assumptions. Contributing further to the
discussion, Krugman (1991) challenges the neo-classical theories’ assumption
of decreasing marginal returns in production, but instead highlights increasing
returns to scale which dominate the 21st century industries, with far-reaching
implications. In his Nobel Prize winning work he emphasizes their crucial
effect on the global concentration of production and labour employment, as
they promote horizontal and vertical integration of large international
corporations.
Within the described interaction of macro-economic forces, migration
decisions are taken by individuals and families within household contexts.
This raises the fundamental question why, under similar external conditions,
some people migrate while others do not. The basic useful resources for
individual migration are material, human and social capital. Schultz (1961 and
1962) as well as later on Borjas (1990) suggested a model which postulates
that potential migrants base their decision on cost-benefit calculations and
chose the destination which yields the highest net benefit.
Todaro’s (1976) and Stiglitz’ (1982) migration theories were achieving major
breakthroughs with regard to self-organized individual labour movements. In
his famous model of migration with urban unemployment, Todaro explains
the fact that (in seeming contradiction to the neoclassical model) urban
unemployment among in-migrants is quite wide-spread by postulating that
those considering to work elsewhere weigh the expected wage differences by
the respective probabilities of finding a job, and follow the option which
promises the highest return, although this strategy includes the risk of being
unemployed at the destination (Todaro, 1976). But as - due to improved
information about job opportunities and upgraded language competences - the
probability to find a job tends to increase over time, it could still pay off to
 33

wait at the destination maybe while trying to make a living by occasional

informal jobs. Further developing Harris’ and Todaro’s body of thought by
explicitly referring to illegal border-crossing, Todaro & Maruszko (1987)
developed a model for undocumented international migration which includes
the probability of being caught and deported.
Another explanation for involuntary unemployment at the urban destination,
backed up by empirical observations, is Stiglitz’s “efficiency wage
hypothesis”. It puts forward that employers do not pay the lowest wage rates
workers would accept, but the one bringing them the highest net profit, taking
into consideration that labour productivity, at least from a certain threshold
on, declines with dropping wages (Stiglitz, 1982).
Since over the early 21st century the most common form of international
migration is the temporary, respectively circular, movement of individuals
without accompanying family members (Constant & Zimmermann, 2013),
followed by transfers sent back to the origin, the joint planning of migration
and remittances has become increasingly popular. The basic theoretical
foundations for analysing this phenomenon were laid in the 1980s by the so-
called New Economics of Labour Migration (NELM) which emphasizes that
individual labour migration is the result of a joint household decision,
including as a determinant also the remittances expected to be transferred
back by the migrant to the household and the purpose they would be used for
(Stark, 1991). In particular in economically less advanced countries such
migration-cum-remittances strategies are widely used to substitute for
dysfunctional capital markets (including the provision of funds for insurances
or investment); for the balancing of risks (e.g. in weather-dependent
agriculture); and for spreading the portfolio of family labour across different
sectors and regions, in order to avoid putting “all eggs into one basket” (see,
e.g., Williams & Baláž, 2015; Chen et al., 2002; Buchenrieder & Knerr,
2000).
 34

Around the turn of the millennium migration research started to increasingly

focus on chain migration and its support by social networks and social capital,
which have become essential characteristics of global 21st century labour
movements (see, e.g., Constant et al 2012; de Haas, 2009; Meeteren &
Pereira, 2013). It centres on the questions why migrants from one particular
location tend to move primarily to the same specific places, and why after
their arrival they typically cluster at certain locations in a non-random way.
This phenomenon had already been introduced into the discussion in the late
1960s by Lee (1966) who pointed to the circumstance that migration often
takes place along specific corridors, and suggested as explanation that
opportunities tend to be concentrated at certain places, and that information
flows as well as support for new migrants are facilitated by people moving
back and forth between origin and destination. In this context he also
emphasized that due to diverse personal skills and different individual
reactions to similar signals labour migration tends to be discriminatory. At the
origin, due to lower costs and reduced risks, it contributes to reduce the
selectivity of migration, while at the destination social capital can attenuate
legal, political, and financial migration obstacles. As migration along social
networks significantly reduces transaction costs, it also encourages informal
and illegal migration. With a view to the fact that with intensifying
transnational social networks, more people can afford to move (Haug, 2008).
Appleyard (1992) emphasized that once the number of network connections
between two places has reached a critical level, the created social linkages
make migration self-perpetuating. A critical view to this approach has been
taken by de Haas (2009), yet, who highlights that such global migration
networks only develop under certain conditions, and that they tend to be
rather unstable. As a weak point in related theories he identifies that they
ignore insights into the mechanisms which eventually weaken and finally run
down networks and migration systems.
 35

Network theory is closely related to the so-called “migration systems theory”

which stays abreast of the fact that migration alters the social, cultural,
economic, and institutional conditions at the origin as well as at the
destinations. A “migration system” thus is defined as a set of places linked by
bi-directional flows of people, goods, services, and information, which
facilitate further migration (Mabogunje, 1970). It fosters the formation of
transnational communities and migratory flows that cluster in a non-random
way (Vertovec, 1999a and 1999b). Kritz et al. (1992) further elaborated on
these linkages by extending their focus on international migration systems
which involve places - whole countries or particular locations within countries
- characterized by significant bilateral movements of people as well as of
goods, capital, information, and different kinds of remittances constitute
connecting feedback mechanisms.
Moreover, the propensity to migrate is determined by individuals’ aspirations
and claims which subject to changing environments, attitudes, and
experiences, may change over time (Knerr, 2000). Some emphasize that
socio-economic dynamics enhance people’s assets and aspirations to migrate
So, the migration of other persons in the social environment and the
remittances they sent back, making their left-behind family members better
off, might give non-migrants a feeling of relative deprivation, and inspire
them to migrate, too, although their personal material situation had remained
unchanged in absolute terms (Stark & Taylor, 1989; Stark & Wang, 2000).
Also, equipped with greater wealth individuals and families are better
prepared to bear the risks associated with migrating, resp. with financing the
migration of a family member. In this context, Martin and Taylor discovered
the so-called “migration hump” which, as they reasoned, is a result of the fact
that in the early stages of a country’s economic take-off a general increase in
the population’s wealth fosters migration, as more and more people feel that
they can bear the costs and risks associated with this step (Martin, 1993;
 36

Martin & Taylor, 1996). Furthermore, with the establishment of migrant

networks, more people are able to migrate, thus reducing the selectivity of
migration. At later stages of economic development, emigration tends to
decline and economies tend to transform from net labour exporters to net
labour importers (Olesen, 2002; Ziesemer, 2008). An essential insight is that,
while the effect of economic development on capabilities to migrate proceeds
more linear; the effect on people’s aspirations to do so rather resembles an
inverted U-shaped curve.
The settings which characterize world markets for highly qualified labour
force differ considerably from those for low-skilled. Growing accumulation of
human capital as incorporated in a person’s skills, education and abilities
enhances his/her propensity to migrate to economically more advanced
countries where demand for highly-qualified labour force which is
indispensable for fostering economic growth - especially in MINT
qualifications24 - is booming. The formation of human capital can at the same
time be both a cause as well as a result of migration. Human capital theory
helps to explain the selectivity of labour migration (Becker, 1962). As
individuals differ in their personal characteristics, like age, gender,
preferences, skills, knowledge and other abilities they also have to expect
different net benefits from labour migration. Moreover, as introduced by
Sjaastad in the early 1960s - migration can be a form of investment in a
person’s human capital as it equips him/her with new experiences and
possibly enhanced skills and knowledge (Sjaastad, 1962).
As emphasized by Florida (2002; 2006), the migration of young highly-
educated individuals does not simply follow the wage drift, but instead is
decisively determined by additional incentives: the so-called “creative class”

24
„MINT”-qualifications or –occupations is the umbrella term for job qualifications
involving mathematics, information technology, natural sciences and technology. For
further details see Bott et al., 2011.
 37

of high potentials and international students is attracted by cities which offer

them appealing amenities and provide a rich quality of place. Inviting factors
are diverse employment options, recreational facilities, and cultural variety
which – within certain limits – act as substitutes for wage level and
employment. Since the members of the creative class are valuable resources
for expanding private companies and for countries’ economic growth, firms
and jobs are “locating, relocating or being created where the talent is”
(Lepawski et al., 2010:329)25.

3 Extent, directions and characteristics of global labour migration26

3.1 Overriding trends of global labour flows

Global labour markets in the early 21st century are characterized by increasing
mismatches between supply and demand. 3.4% of the world population, i.e.
more than 247 million people, are living outside their countries of birth27
(World Bank 2016). Around 150 million of them were migrant workers in
2013 (ILO, 2016). Parts of them were accompanied by family members, but
this constellation has become increasingly rare mainly due to mounting host
country restrictions. Since the turn of the millennium the total number of
international migrants has steadily grown, although their share in the world
25
For a detailed outline and an in-depth empirical test see Tlatlik (2016).
26
The World Bank warns against pitfalls when using data on international migration and
remittances: “The data are often missing, lagging, or lacking in cross-country
comparability owing to the use of different definitions and the lack of consistent collection.
Capturing data on irregular flows of migrants and remittances remains a big challenge.”
(World Bank 2016a: viii) Remittance flows and the stock of migrants may be
underestimated because of the use of informal remittance channels, irregular migration,
and ambiguity in the definition of migrants (foreign born versus foreigner, seasonal versus
permanent, foreign born versus citizen). (ibid: xiii)
27
Around 6% were officially recognized as “refugees” in 2013, excluding refugees from
the West Bank and Gaza (World Bank Fact Book 2016) from which it can be concluded
that the vast majority of the migrants have opted to look for better living conditions,
mainly work, or family reunification.
 38

population did hardly change, and it is not expected to do so over the

foreseeable years to come (World Bank, 2016a).
Though including only data up to 2000, and hence not covering our focus
period, Czaika & de Haas’ (2014) analysis of long-term trends of international
labour migration possesses essential relevance for the present empirical
considerations. Investigating global migration patterns between 1960 and
2000, they found that the major changes of migratory flows were directional,
and that “migrants from an increasingly diverse array of non-European-origin
countries [are] concentrating in a shrinking pool of prime destination
countries” (Czaika & de Haas, 2014:283), reflecting the asymmetric nature of
globalization processes in general (Czaika & de Haas, 2014). As a major
determinant of this development they identify the processes of economic
growth within the sending countries. Over the considered period, many low-
income countries experienced emigration hikes, entering what the authors
name “a migration transition”: as education, living standards, and
infrastructure improved, more people than ever obtained the resources to
migrate. Also, better access to information via mass media made them more
aware about conditions and opportunities elsewhere, thus enhancing the
aspirations to move to another place (de Haas, 2010; Skeldon, 2012).
Accordingly, the skewed spatial impacts of globalization are reflected in
shifts in global migration patterns.
Income inequalities between and within countries as drivers of migration were
emphasizes by Stiglitz (2006). Similarly, referring to the map of global
resource distribution, Florida (2005) pointed out that most economic activities
have remained concentrated in a relatively small number of countries and of
specific places, and that these spatial inequalities are further enhanced by the
clustering of highly qualified in a few locations, thus driving vicious circles of
low economic development and increasing out-migration in poorer regions of
origin. As summarized by Czaika & De Haas (2014:318): “Human resources
 39

and economic activities have become increasingly concentrated in a relatively

low number of countries or, more precisely, metropolitan areas within a few
countries, which reflects processes of urbanization and internal (rural–urban)
migration.” Within the overall globalization process, Florida (2006) considers
migration as one of the key dimensions of the highly unequal global terms of
exchange, being reflected in the fact that employment and residence rights are
granted preferably to the favoured groups of higher skilled and well educated
while the less qualified are excluded from such privileges, making low-skilled
migrant workers more vulnerable to exploitation and indecent working
conditions.
Top destinations of registered international migrants in the 2,000s are the
United States (with 46.1 million inhabitants born abroad in 2013), Saudi
Arabia (with 14.6 million), Germany (with 11.1 million), the Russian
Federation (with 11.0 million), United Arab Emirates (UAE) (with 8.0
million), United Kingdom (with 7.8 million), France (with 7.5 million),
Canada (with 7.4. million), Spain (with 6.6 million), and Australia (with 6.5
million) (World Bank, 2016b). The share of foreign born in the total
population displays a different ranking: Qatar has, with 90.8%, the highest
share, followed by United Arab Emirates (UAE) (88.5%), American Samoa
(75.7%), Sint Maarten (Dutch part)28 (73.8%), and Kuwait (72.1%).
The top ten migrant source countries are India (with a stock of 13.9 million
emigrants in 2013), Mexico (13.2 million), the Russian Federation (10.9
million), China (9.7 million), Bangladesh (7.6 million), Pakistan (6.2 million),
the Philippines (6.0 million), Afghanistan (5.6 million), Ukraine (5.6 million),
and United Kingdom (UK) (5.2 million) (World Bank, 2016b). Nepal is on
rank 30, with 2.0 million. Measured by the share of its nationals living abroad
as part of those staying in the home country, the top-five emigration countries
28
Sint Maarten is an autonomous country within the Kindom of the Netherlands, located in
the Caribbean.
 40

are Monaco, with 141.2%, Dominica (106.6%), West Bank and Gaza
(96.4%), Antigua and Barbuda (63.2%) and Guyana (60.8%), i.e. country
with quite small populations.
Typically, international labour migration concentrates along specific bi-
national corridors, where the majority of the migrants from one source
country travel to one major destination country. Mexico-United States is the
world’s largest corridor, accounting for a stock of 13 million migrants in
2013, followed by the Russia-Ukraine and the Bangladesh-India corridors
(World Bank, 2016b). The most powerful participants on the international
labour markets are the destination countries. They determine who is allowed
to enter, stay and work within their borders, while at the supply side the
growing excess pool of workers from low-income countries with few
alternatives to earn a livelihood, have hardly any bargaining power or
possibilities to influence the rules, and just are restricted to work under the set
conditions or alternatively refrain from migrating.

3.2 The market for low-skilled

General observations
Between the 1980s and early 2000s, the global labour supply – in terms of
additional young people entering working age - almost doubled, although at
the same time in the Western world the rate at which new workers entered
the labour force began to decline (IMF, 2007). Most of the increase consists
of lower-educated and lower-skilled, but in 2010, according to estimates by
Dobbs et al. (2012), between 90 and 95 million low-skilled workers
worldwide were unemployed, i.e. about 10% of the total low-skilled. At the
same time the number of those employed in poorly paid, insecure, and
unprotected work has increased dramatically, as a result of an on-going “race
 41

to the bottom”29 fuelled by a general pressure to lower labour standards.

Particularly in countries with low legal standards of protective rights it has
enhanced the exploitation of workers, and undermined legally expressed
protections (Salzman & Lowell, 2013). Entrepreneurs in more labour-scares
countries have accessed this pool of workforce through imports of goods, the
relocation of production processes to countries with abundant cheap labour,
and by employing in-migrants (IMF, 2007). The harsh conditions low-skilled
workers may face in their host countries are described in countless
publications, documented by researchers, human rights activists and
journalists (see, for example, International Human Rights Clinic, 2013;
Human Rights Watch, 2015; Torres, 2013). The major problem identified by
them is that government institutions enforce laws for protecting the workers
less strongly than they might, implying violations of legally prescribed labour
rights (Davies & Vadlamannati, 2013).

Major host countries of Nepalese labour migrants

The major host country for Nepal’s international migrant workers is India.
However, as mentioned above, only quite rough estimates are available about
their number, and even less about low-skilled migrants from third countries
working in India. Nepalese traditionally, have worked for the Indian state, in
its famous Gurkha regiments as well as the civil service. They also have been
active in the private sector, as security personnel, domestic workers, and
labourers in mines, tea estates and dairy farms. (Sharma & Thapa, 2013)
Labour migration between Nepal and India is mostly seasonal; many
Nepalese from rural areas, almost exclusively men, move to India for work
during the lean agricultural period at home and return before the planting
29
"Race to the bottom" describes the process of companies’ strategies to realize the lowest-
cost production conditions. The lowest-cost workforce tends to be found in countries with
the weakest protections for workers, including safety, number of working hours, wage
levels, job security, bargaining power and child labor.
 42

season. Only rough estimates can be found about them. For example, one
study set their number at around 800,000 (Sharma & Thapa, 2013)30. There
are occasional accounts in official reports and in the press about harsh
working conditions and small payment of seasonal migrants in India (IOM,
2009).
In the 21st century, an unknown number of second-generation Nepali migrants
are living and working in the country, many of them being active in white-
collar jobs. Also, large numbers of Nepalese are studying in India31.
Nepalese officially registered overseas workers are moving mainly to Saudi
Arabia, Qatar, the UAE, Malaysia, Kuwait, and South Korea. These countries
host millions of foreign workers, among them a huge number of overseas
contract workers from South and South East Asia. In most of these countries
the share of Nepalese in the total stock of international labour migrants is
comparatively small. This, together with the fact that due their low skill level
they can easily be substituted by workers from other nations, gives them a
marginal leverage when negotiating for better working conditions or higher
wages.
In the major host countries of Nepalese labour migrants, significant violations
against the basic standards of decent work conditions have been identified.
Overseas workers in Bahrein, Qatar, Saudi Arabia, and the UAE have
reported that when arriving in their host countries, they were forced to sign
contracts that pay less than promised in the contracts they signed beforehand

30
The situation of Nepalese in India is complicated as non-transparent. So, for example, in
the early 2010s, in addition to the regular seasonal migrants, around 30,000 Nepalese are
estimated to be serving in the Indian army; women, girls and children are involuntarily
trafficked to India; a large, but completely unknown number of Nepalese also hold Indian
citizenship, although dual citizenship is disallowed in both countries; and Nepali migrant
workers are using India as transit country for moving to a third country (for details see
Sharma & Thapa, 2013).
31
In 2015, of the 35,884 Nepalese students enrolled in foreign universities, 8,183 were in
India which made India the second largest host for Nepalese students (UNESCO, 2017).
 43

when leaving their countries of origin (Human Rights Watch, 2015 and 2016),
a practice which makes them vulnerable to forced labour, even more so if they
have incurred debts to pay for the recruitment fees.
In addition, the Kafala System32 constitutes an on-going challenge although
some countries (for example Qatar in 2016) have declared their intention to
abolish it. It opens the possibility to expose migrant workers to many forms of
abuse, including exploitative working conditions, abysmal accommodations,
restrictions on freedom to organize or bargain collectively, and non-payment
of salaries. (Malit Jr. & Al Youh, 2013)
In general, the chances of being allowed to bring family members to the host
country decreases with the migrants’ skill level. It is striking that in their
major host countries Nepalese are among the nationalities which are joined by
the smallest share of dependents. This indicates their marginal, insecure and
temporary status, forbidding them – by law or by factual conditions – to live
there with their family members.
Below, we take a brief look at the conditions in these countries. The data
bases presented in this context have to be considered with care, however, and
just serves as a rough orientation. As some countries do not publish official
data about the number of foreigners within their borders (and in some cases
might not even dispose over these data themselves), interested institutions and
researchers have to rely on estimates. Others publishing such data do not
show the category “foreign workers” separately, and in any case those who
have entered the host countries illegally or informally are not registered at all.
In light of this data situation, the figures collected in Table 1 include different
years depending on data availability, and not all data sources used apply the
same definitions and delineations.
32
Under “Kafala”, foreign workers require a local sponsor, in the form of an individual or
company, whose permission they need to switch to another job or to leave the country.
This system makes workers vulnerable and may leave them with little protection.
Therefore it is often compared to modern-day slavery.
 44

As shown in Table 1, the per-capita income in Nepal’s mayor host countries

in all cases amounts to a multiple of Nepal’s per-capita income, reaching from
the 16-fold in Indonesia to the 97-fold in Qatar.33

Saudi Arabia. In 201334, Saudi Arabia hosted 14.6 million foreigners, among
them half a million Nepalese; thus, apart from India, it was the major host
country of Nepal’s international migrant workers, although Nepalese made up
only 3.4 the country’s foreign workforce. Saudi Arabia keeps comparatively
stiff control over immigration, but at the same time “Saudi authorities conceal
data pertaining to the nationality breakdown of foreign residents in official
publications.“ (De Bel-Air, 2014a:6). Altogether 6,026,583 non-nationals
were registered as economically active, corresponding to 56.5% of the
country’s total employed population. Almost all of them (99%) were occupied
in the private sector in 2011, making up almost 90% of the sector’s
manpower, while of the employed Saudis 52% were enrolled with the
government. The foreign population is mostly male (65% men), has a low
level of education (62.3% of employed non-nationals had below secondary
level education) and is in working age (in 2007, almost 80% of all non-
nationals were between 15 and 64 years old). 26.5 % of the foreign labourers
were working in the construction, 22.3% in the retail and wholesale, and 15%
in the private households sector, mostly in the lowest “blue collar” categories.
In addition, a significant number of non-nationals are staying illegally in the
country. In 2012 Saudi authorities disclosed that up to five million foreigners
were residing and working illegally, having entered, for example as pilgrims
for the Haj and then overstaying. (De Bel-Air, 2014a)

33
India is an exceptional case, with a factor of just 2.5 (calculated with data from World Bank (2016c).
34
Data from Saudi Arabia in this section are from 2013, if not otherwise indicated.
 45

Table 1: Key data of Nepalese migrants’ major host countries

GDP p.c.
Host Inbound
Nepalese % Nepalese (US$), in (.) Major nationalities of in-bound
Country migrants labour migrants (Number)2
rel. to Nepal1

Saudi 24,161 India 2,000,000 – 2,800,000

a)
500,000 14,600,521 3.4 Egypt 1,000,000 – 2,000,000
Arabia (34.5)
Yemen 800,000 – 1,000,000

96,732 India 452,578 (31.2)

Qatarb) 339,901 1,449,234 23.5 Nepal 339,901 (23.5)
(137.8)
Philippines 165,447 (11.40)

11,307 Indonesia 1,051,227

Malaysiac) 201,345 1.982.665 10.2 Bangladesh 352,005
(16.1)
Myanmar 201,345

43,593 India 648,203

Kuwaitd) 56,135 1,770,762 3.1 Egypt 205,627
(62.1)
Bangladesh 144,340
United
43,963 India 3,499,337 (43.2)
Arab 43,809 8,095,126 0.5 Egypt 935,308 (11.6)
(62.6)
Emiratese) Bangladesh 906,483 (11.2)

27,970 Vietnamese 64,426 (30.0)

Koreaf) 10,423 241,554 4.3 Philippines 26,227 (12.2)
(39.84)
Indonesia 26,564 (12.4)
1
Nepal’s GDP per capita: 702 US$ (World Bank, 2017)
2
Figures in brackets indicate percentages of total.

Sources:
a. De Bel-Air (2014a). Data are mostly compiled from the Saudi Press, reflecting “most
recent estimates released in press conferences and interviews by Saudi government’s
officials and sending countries’ diplomatic missions.” (De Bel-Air 2014a).
b. De Bel-Air (2014b), cit. from Qatar National Human Rights Committee (HRC) (2013)
c. World Bank (2016b) and UNICEF (2016); figures are from 2013.
d. Based on data from De Bel-Air (2013); data for Non-Nepalese labour migrants are
from 2012, calculated by the author by multiplying the total number of nationals from
each country residing in Kuwait by the share of active labour force among the
residents of that nationality; data for Nepalese are from World Bank (2016b) and refer
to 2013.
e. UN (2013) World Bank (2016b); Oh et al. (2011).
f. Oh et al. (2011); data include in-migrants under category E9-visa.
 46

Qatar. Of Qatar’s 339,901 officially registered foreigners in 2012, almost one

quarter were Nepalese, thus being the second largest group of expatriates after
Indians. Qatar’s foreign workers are mostly low-skilled single male Asians
living in labour camps. The migrants’ nationalities essentially determine the
conditions under which they are living and working. “Nepalese … are quasi-
exclusively workers, thus clustered to the lowest tier of the occupation and
income ladder” (De Bel-Air, 2014b). This low status is also demonstrated by
the fact that just 0.2% of the Nepalese staying in Qatar are family dependents;
this share is 4.8% among the Bangladeshis (also a low-skilled group of mostly
temporary workers), 10% among the Filipinos, 17% among the Indians and
almost 50% among those from Arab countries (De Bel-Air, 2014b).

Malaysia. In 2016, an estimated three to four million migrant workers were

staying in Malaysia, which corresponds to 20-30% of the country’s labour
force, more than half of them (56%) being Indonesians and 10% Nepalese
(ILO, 2016a). As many have entered the country illegally, or have overstayed
their visa, the data about the number of foreign workers are quite uncertain, in
particular with regard to Nepalese. An increasing number of reports have
documented serious labour right abuses against migrant workers, including
forced labour, human trafficking and abuse (ILO, 2016b; Sibarani, 2016;
Amnesty International, 2010). Low-skilled expatriate workers in Malaysia are
mainly employed in agriculture and on plantations, semi-skilled in
manufacturing, construction and the service sector (Sijapati et al., 2015). In
FY 2013/14, 74% of the foreigners working in the country were unskilled,
and the trend in favour of this category is increasing. Of the Nepalese working
in Malaysia almost half are unskilled (Sijapati et al., 2015).
 47

Kuwait. In 2012, 1,770,762 foreigners officially resided in Kuwait, making up

about two-third of the country’s resident population. Around 73% of them
were economically active, reaching 82.6% of the country’s total active
population and 93% of Kuwait’s private sector workforce (De Bel-Air, 2013).
Most of the non-Kuwaiti labour force is employed in the private production
sector (63%), in particular in construction, and as domestic workers (30%),
while Kuwaiti nationals are usually enrolled in the government sector (78% of
the labour force with Kuwaiti nationality in 2012). The foreign population is
predominantly male (65%), poorly educated (70% of employed have a below-
secondary level education), relatively young (with a mean age of 32.8 years),
and in working age (83.4% being in the age group of 15 to 60 years) (De Bel-
Air, 2013). The single largest expatriate community are Indians, with 648,203
persons or 36% of the officially registered foreigners, This figure includes
4.8% family members; this share is 3.6% among Pakistanis, and 3.9% among
Sri Lankans, while it is considerably higher among migrants from Arab
countries, notably among Syrians with 61.3% and Egyptians with 56%.
According to IOM, relying on the local press, in 2016, females constitute
about one third of Kuwait’s migrant population, a share which has increased
significantly over the 2010s (IOM, 2016).

United Arab Emirates35. The UAE, in 2013, hosted around eight million
foreigners, most of them residing in Dubai and Abu Dhabi. This amounts to
more than 90% of the UAE’s population. Most of them came from India (with
a permanent share of 40 to 50%) and the Philippines. Other major sending
countries are Pakistan and Bangladesh. These figures are more or less rough
estimates as the UAE population data „are not yet disclosed to the public in
real time“ (De BelAir, 2015:8); as of early 2017, the last population census
35
The UAE is a federation of the seven emirates Abu Dhabi, Ajman, Dubai, Fujairah, Ras
al-Khaimah, Sharjah and Umm al-Quwain. It was established in 1971.
 48

available was that of 2005. Foreign workers display a comparatively divers

profile, as compared to other Gulf Cooperation Council (GCC) states: the
“blue-collar” categories (from “craft and related trade workers” to
“elementary occupations”) employed a third of them, another 22% were in
“trade and services” occupations, and 24% were in managerial and
professional positions (De Bel Air, 2015). Nepalese in the UAE were
numbering around 125,258; of these, 75,000 were in Dubai, some 30,000
in Abu Dhabi; the remaining are spread out over the Northern emirates,
according to official figures presented in the Gulf News (2013). Most of them
work in the construction sector, others in hospitality and security services. A
few are also occupied in skilled professionals. According to the Embassy of
Nepal in Abu Dhabi, in 2017, 200,000 Nepalese were residing the UAE
(Embassy of Nepal, 2017).
Observers complain that policy and enforcement gaps allow employers and
recruitment agencies in the UAE to violate international and local labour
standards, and undermine the UAE's official efforts to uphold international
human-rights obligations (Malit Jr. & Al Youh, 2013).

Republic of Korea (South Korea). In 2011, 996,607 registered foreigners were

living in Korea, of which 182,250 were employed in the manufactures sector.
This last group comprises only persons who are not categorized as “ethnic
Koreans”. Ethnic Koreans - although holding a non-Korean (mostly Chinese)
nationality – in contrast enjoy special privileges on the Korean labour market
which distinguish them from other expatriate workers. For non-ethnic
foreigners, employed in low-skilled jobs, category E9-visa (“Non-
professional employment”) to stay for a maximum of three years (with the
possibility of a 22-month extension) are issued for selected workers from 15
eligible countries. Most of the non-ethnic Korean international migrants
 49

(30%) are Vietnamese. In 2014, 201,280 out of 1,923,394 foreign migrants

were staying in the country without a legal status (Jang, 2015: 18).

3.3 The global labour market for highly-skilled

Over the early 21st century, international migration of highly qualified labour
force (occasionally also termed „brain drain“) has increased dramatically
(Docquier & Rapoport, 2011), because “[d]ue to economic globalization
industrial countries have turned into knowledge-based economies which are
highly dependent on technological innovation to maintain their prosperity.”
(Tlatlik, 2016: 35). A closer look reveals that this applies in terms of stocks,
but not necessarily in terms of the share of high skilled emigration in the total
highly qualified labour force of individual countries, essentially because a
parallel rise in educational attainments has taken place (Docquier & Rapoport,
2011). International comparisons show that these rates decrease with country
size, and countries with smaller populations are the most affected by “brain
drain” in terms of intensity: on average the out-migration rates among highly
qualified are seven times higher in countries with populations of less than 2.5
million than in those with population sizes of over 25 million. High-skill
emigration rates exceed 80% for example in Guyana, Jamaica and Haiti.
While in general middle income countries display the highest rates of out-
migration (which is attributed to the fact that many have both the motivation
and the means to emigrate), high-income countries (where material incentives
are comparatively low) as well as low-income countries (where funding
constraints are more binding and less transferable human capital is available)
show lower rates36. According to data collected by Docquier et al. (2011), the

36
The main international suppliers of highly qualified labour force (stock) in 2,000 were
the United Kingdom 1,479,604, Philippines (with 1.111 million), India (1.035 million),
Mexico (0.949 million) Germany 944579 and China (0.784 million) (Docquier, Lowell &
Marfouk (2009).
 50

emigration rates of Nepalese college graduates as percentage of the national

high-skilled labour force ranked 66 among 90 measures countries.
Out-migration of highly-qualified labour force to high-income countries has
become a serious concern in low-income countries as well as among
development institutions. Through these movements globalization seems to
make human capital „...scarcer where it is already scarce and more abundant
where it is already abundant, thereby contributing to increasing inequality
across countries.“ (Docquier & Rapoport, 2011: 53). In fact, as demonstrated
in particular by Docquier & Rapoport (2011), empirical analyses of the
determinants of high-skilled emigration show that poor economic
performance and its implications, like poverty, malfunctioning institutions,
discriminations, or political repression, are essential determinants of high-
skilled’ emigration. In general it can be observed that high skilled’ rates of
out-migration are significantly higher among females than among males
(Docquier et al., 2009).
Although comprehensive and detailed quantitative information about the
international mobility of highly-qualified labour force is sketchy, it remains
undisputed that they are largely absorbed by OECD, i.e. higher income
industrialized countries. This also applies to a significant share of Nepal’s
highly-skilled, who undoubtedly are intensively involved in the “Global Race
for talents”. In 2014, 110,000 Nepalese were living in the USA; 42% of them
had arrived after 2010, and they displayed a probability of 23% to become
naturalized (Zong & Batalovo, 2016). In the major host countries of Nepalese
international migrants only few Nepalese are employed for highly skilled
responsibilities, yet. For example, just an estimated 2% of the Nepalese
working in the GCC countries in 2010 were in that category (Oommen, 2016).
 51

Although the share of Nepal’s international migrants living in OECD

countries is comparatively small, this group is important with regard to the
country’s loss of highly-skilled and highly-qualified human capital: “The fact
that so many Nepalese professionals are living and working in the United
States and other developed countries on a long-term basis is indeed very
disturbing.” (Tamot, 2008: 5), and is, in Tamot’s words: “… the most serious
challenge faced by Nepal today.” (ibid) Evidently, it has severe implications
for Nepal’s prosperity. Hence, Nepal’s economic backwardness and socio-
economic distresses can also to a significant extent be explained by the impact
which comes from the fact that a large number of Nepalese professionals
reside in high-income countries (Tamot, 2008).

4 Global remittances
Migrants’ remittances occur in various forms: monetary, in kind, as human,
social, and cultural capital and as political transfers (Knerr, 2012). As such
these reverse flows of remittances have become part of development
strategies, which view the potential of return flows of capital, knowledge,
ideas, attitudes, and more educated people for facilitating economic growth in
the migrants’ countries of origin. Monetary remittances have been in the
foreground of research and policy strategies, but the causes and implications
of the other forms are also increasingly investigated. In particular, additional
skills and knowledge that workers have acquired abroad are hoped to benefit
their home countries upon their possible return.
The rest of this section focuses on monetary remittances; nevertheless the
other forms of remittances should be kept in mind as essential elements of the
migration-development nexus. The NELM as presented above emphasizes the
intense relationship between the decision about the migratory step and the
monetary remittances to be expected from that. Also, with regard to the
 52

household decisions taken the overwhelming share of migration from Nepal is

explained theoretically by the NELM (Nepal, 2013).
Officially registered world-wide migrants’ remittances reached more than 600
billion US$ in 2015, after a sharp and steady growth over the early 21st
century (World Bank, 2016). An additional amount of remittances, estimated
at around one-third of that official sum is supposed to have entered the
receiving countries via informal channels, for example through the Hundi
system37 or by being hand-carried by returnees. India received the highest
amount of remittances in 2015, with US$ 72 billion, followed by China (US$
63.9 bn.), the Philippines (US$ 29.7 bn.), and Mexico (US$ 25.7 bn.). Nepal
is on rank 23 with US$ 6.6 bn (World Bank, 2016a). Most of the global
remittances come from the USA (with US$ 56.3 bn. in 2014), Saudi Arabia
(36.9 bn. US$), the Russian Federation (US$ 32.6 bn.), Switzerland (US$
24.7 bn.), and Germany (US$ 20.8 bn.) (World Bank, 2016a).
For about 25 countries these remittances constitute 10% and more of their
GDP38 (World Bank, 2016). Nepal’s officially received remittances amounted
to 29% of its GDP in 2015. Measured by this indicator, it ranks third among
the most remittance dependent countries in the world (World Bank, 2016a).
This high influx is partly due to the fact that, as low-skilled foreign workers
Nepalese are only allowed to stay in the host country for a restricted contract
period and generally obliged to leave their family members behind and which
motivates them to save as much as possible within a short period of time.
Also, the country’s low per-capita income and wide-spread poverty indicate
that receiving remittances is crucial for families’ well-being which exerts
considerable pressure on those who have an opportunity to work abroad.

37
The Hundi system is an informal way of transferring money, whereby it is dispersed
or collected by local agents on behalf of friends, relatives, or other agents on the basis of
confidence and the trust that all obligations agreed upon by both sides will be fulfilled. It is
commonly used particularly in South Asia.
38
Calculated from data of World Bank (2016a).
 53

At least in the short term they appear to contribute to growth and development
in the countries of origin (Meyer & Shera, 2016; Ratha, 2013; Knerr, 1998).
Yet, in the long term large-scale inflow of remittances may also bear quite
negative effects on the receiving country’s economy (Knerr, 2008).

5 Conclusions and prospects

In the early 21st century, international labour migration is a vital element of
international economic relations, resulting from and at the same time fuelling
globalization. The worldwide market is dominated by a few host countries
where global economic activities concentrate; while on the supply side a large
number of migrants from low-income countries are competing for the
available jobs. It is also characterized by a dual structure, where in the low-
skilled workers segment labourers use to be stuck in dependent positions,
accepting low wages and indecent working conditions, and in the high-skilled
segment professional experts are searched for in a global race for talents.
For Nepal, international migration and remittances are major determinants of
national economic development and of families’ livelihood security. But
while, on the one hand, the country is highly dependent on the export of the
services of its work force, it is, on the other hand, just a marginal player on
the global labour market, without significant influence on the wage levels and
working conditions in the host countries. This situation is mainly resulting
from the fact that Nepal’s international migrants are mostly low-skilled and
even unskilled. They belong to the cheapest strata of the global labour
reserve, working for small money and accepting harsh working conditions
and noncompliances with labour laws and working contracts. The majority of
Nepal’s international migrants are leaving the country with a job contract or at
least a fixed employment commitment. At the same time some – relatively
more women than men – move across borders illegally or informally, often on
“good luck and risk”, which makes them even more vulnerable.
 54

Considering the development of external factors, there are hardly any signs
that the future situation on the global labour marker will look more favourable
for unskilled and low-skilled workers; it may rather become worse. There are
hardly any doubts that supply will further increase over the first half of the
21st century, while the development of the demand side overall is insecure and
volatile.
Considering the employment prospects major host countries of Nepal’s labour
migrants a mixed picture emerges. While, in the short term, the construction
boom in some Middle East countries - in particular in Qatar which has several
large-scale international sports events ahead - promises ample employment
opportunities, the mid- to long-term expectations are more pessimistic in the
face of volatile oil prices and a general global expectation that the age of high
oil revenues might be over. Although some Gulf countries, namely Oman,
Qatar, and Abu Dhabi, offer favourable perspectives in the tourism sector,
including the construction of the associated infrastructure, the competition by
other labour exporting countries, like Bangladesh or Indonesia, at the same
time is becoming tighter.
In Malaysia, a substantial proportion of future job creation is expected to be in
industries that rely heavily on low-skilled workers (i.e., construction, palm
oil, agriculture, electrical and electronics, etc.), and thus an increasing
demand for unskilled migrant workers in these sectors is predicted (Sijapati,
2015)39.
However, counterforces are expected to reduce the employment chances on
the international market for unskilled in the longer run. Demographic shifts,
armed conflicts, income inequalities, climate change are expected to
encourage ever more workers to cross borders in search of employment and
39
For details about the labour demand perspectives in major host countries see GIZ & ILO
(2015).
 55

security (ILO, 2016). Hence the supply pressure on the international labour
market will expectedly increase tremendously. Although unskilled labour in
principle can substitute physical capital, it will become more and more
obsolete, and that the world is early 21st century, at the brink or already in the
course of an epic change (Riffkin, 2014), where less and less labour is needed
to produce the same output, involving first the unskilled, but increasingly
also reaching out to the knowledge-workers: “Big Data, advanced analytics,,
algorithms, Artificial Intelligence (AI), and robotics are replacing human
labor across the manufacturing industries, service industries, and knowledge-
and-entertainment sectors, leading the very real prospect of liberating
hundreds of millions of people from work in the market economy in the first
half of the twenty-first century.” (Riffkin, 2014: 121).
Although a growing number of multinationals, especially from high-income
countries, have begun to realize the disadvantages of producing in low-
income countries and benefits of keeping more of their operations close to
home - mainly because for many products, labour is becoming a diminishing
fraction of total costs; long, complex supply chains have turned out to be quite
risky; and far-away-production for the domestic market requires expensive
inventories (see, e.g., The Economist, 2011) – this will hardly result in more
jobs for low-skilled from poorer regions in industrialized countries, primarily
because of the technical reasons just mentioned above and also because of
mounting resistance against less-qualified foreigners within the on borders
among domestic populations of high-income countries. Major host countries
develop resistance against foreigners within their borders, and in the early 21st
century, even physical fences are growing all over the world, from USA to
Europe.
As in particular MINT qualifications are increasingly scarce in industrialized
countries (Tlatlik, 2016) the global “race for talents” is expected to continue
and probably intensify. But only a minor share of Nepal’s international
 56

migrants belong to the group of internationally searched-for highly-qualified

experts. Although the global demand for highly-qualified will further expand,
the supply from Nepal meets limits, also with negative draw-back for the
domestic economy which would keep on losing scarce human capital.
This introduction is just about facts and figures which at the same time might
serve as indicators about the social situation of hundreds of thousands of
individual migrants’ fates.

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 63

International Labour Migration and Remittances in

Nepal: an Overview
Beatrice Knerr

1 Introduction
Although to the level reached in the early 21st century it is a comparatively
new phenomenon in Nepal’s history, mass labour migration to foreign
countries builds on a long tradition, dating back to the 19 th century. What
makes a difference between the previous and the late 20th-early 21st century
movements is the magnitude to which this phenomenon reaches every corner
of the country, through the departure of working-age family members and the
influx of remittances. For countless low- and middle-income Nepalese
families it has become a common strategy of livelihood security, involving
noticeable also those who have no migrants in their family and do not receive
any remittances from abroad. This chapter provides a compact factual
overview of the historical development and the extent of overseas migration
and associated remittances in Nepal.
The next section (2) gives an overview of the history of international
migration from Nepal. Section (3) elaborates on the driving forces of the
movements. In section (4) the composition of the migratory flows with regard
to destinations, skill-level and gender are presented. Legal instruments
applied are shown in section (5). Section (6) focuses on remittances, and
section (7) presents some perspectives based on different scenarios about
external future developments.
 64

2 History of international labour migration from Nepal

The history of international labour migration from Nepal dates back to the
early 19th century when the then Captain of the Nepalese Army, Balbhadra
Kunwar, along with 200 dissident soldiers, joined the army of the Punjabi
King Ranjit Singh at Lahore after their defeat in the Anglo-Nepal War (1814-
1816) (Marshall, 2005). Over that war, the Nepalese soldiers had impressed
the British by their braveness, and consequently they recruited three Gurkha
regiments for their own army which was formalized in the ‘Treaty of
Sugauli’40 (Seddon et. al., 2001). The Gurkhas strengthened their reputation
during World Wars I and II and the Falkland Islands conflict 41. In the 21st
century, Gurkha fighters are still serving in the British and Indian armies and
in the UN peacekeeping forces.
In the 19th to early 20th century, numerous Nepalese – particularly those
affected by widespread land confiscations by creditors in hill villages;
oppressive land and labour policies, and demands for compulsory unpaid
labour, often to substitute for monetary loan repayments - were attracted to
India by employment chances in the construction sector, in coal mining, and
on tea plantations, and for land reclamation in different Indian states, namely
Assam, Darjeeling, Garhwal, Kumaon, and Bengal (Thieme and Wyss, 2005).
Many of them finally settled permanently in their host region, becoming
known as ‘Indians of Nepalese origin’. After India’s Independence in 1949,
the movements of Nepalese further diversified into industrialized Indian

40
The Treaty of Sugauli was signed in 1815 between the East India Company and the King
of Nepal following the Anglo-Nepalese War of 1814-16. It included territorial concessions
according to which parts of Nepal would be given to British India, the establishment of a
British representative in Kathmandu, and the permission to Britain to recruit Gurkhas for
military service.
41
The Falklands Conflict was a ten-week war between Argentina and the United
Kingdom over the Falkland Islands, the British overseas territories in the South Atlantic, ,
in 1982 after Argentina had invaded them. The conflict lasted 74 days and ended with
Argentina’s surrender.
 65

cities, like Delhi, Mumbai, and Bangalore. Continuing migration to India

strengthened the migrants’ social networks and transnational ties, thus
accelerating the inflow of Nepalese (mostly from the Far-Eastern and Mid-
Western Regions) and their clustering at certain destinations, and further
reinforcing India’s role as an important employer of low-skilled Nepalese
labour force (Thieme and Wyss, 2005).
In the early 20th century a large number of labour migrants from Eastern
Nepal were recruited for forest clearing in the neighbouring Bhutan to open
new cultivation areas in the Southern parts of the country. By 1988, they
constituted 45% of Bhutan’s total population, and gradually became perceived
as a political threat which finally resulted in mass expulsion in 1990 (IOM,
2008).
From the early 1980s onwards the economic up-rise of the Gulf and South
East Asian countries, and in particular the oil boom in the Middle East,
coinciding with global trade liberalization and intensifying worldwide
information flows, triggered a strong expansion of international labour
migration from Nepal and a wide diversification of the migrants’ destinations.
Also, Hong Kong developed into a major destination, offering favourable
legal provisions to those whose parents had served its at that time British
Government (Garner & Gurung, 2003). Similar regulations as in Hong Kong
were issued in 2004 in the UK, allowing Gurkhas’ families to settle there and
granting British citizenship to those who had served for at least four years in
the British army (Thorp & Woodhouse, 2009). As a result, the share of those
leaving for India continuously dropped from 90% of all migrants in 1981 to
37% in 2011 (Kansakar, 2003; CBS, 2012).
According to Nepal’s population census, 1.92 million persons (i.e. 7.2% of
the population) were abroad in 2011 (CBS, 2012). Between the early 2000s
and the Fiscal Year (FY) 2013/14, the number of Nepalese officially
registered for employment abroad rose by about the fourfold, from 105,047
 66

p.a. to 437,116 p.a., i.e. an average of 36,436 every month, or 1,198 each day
(GoN, DoFE, 2015, 2016; see Fig.1), while in the early 1990s it had been just
a few hundred (Garner & Gurung, 2003). In 2012, CBS reported that on the
average about 25% of all households had at least one currently migrating
member (CBS 2012).
Over the early 21st century, Malaysia has been the major official host country,
with, 206,719 registered Nepalese arriving in FY 2013/14, followed by Qatar
with 103,850 and Saudi Arabia with 75,016. A salient feature in the data rows
is the remarkable increase in the number of migrants to South Korea and
Japan (Fig. 1).

Fig. 1: International labour migration from Nepal, FYs 2002/3 to 2014/15

200,7
180,7
160,7
140,7
Migrants (Thousand)

120,7
100,7
80,7
60,7
40,7
20,7
0,7

Years
Malaysia Qatar Saudi Arab UAE Kuwait

Source: Based on data from MoF, Nepal; DoFE (2015)

Because Nepalese need neither passport nor a visa to enter, settle and work in
India, official figures exclude migrants to India due to lacking
 67

documentation42. By 2010, the UN assessed the number of Nepalese migrants

living in India at 1.7 million (UN, 2016), while the World Bank in 2016
estimated the number of settled at about 0.6 million, and of seasonal
migration in India at more than two million (World Bank, 2016). In addition,
also a substantial number of migrants moving to other countries use irregular
and informal channels and thus remain unregistered by the government;
assessing their number even approximately is hardly possible (GoN, 2014).

3 Driving forces
Nepal’s permanently growing out-migration of labour force is the result of
dynamic developments both on the domestic labour supply side and the
demand from the international market. The supply side is basically driven by
population growth, a lack of domestic employment opportunities, and deep-
rooted poverty. Each year, around 400,000 young people enter Nepal’s labor
market, and most of them do not find decent employment opportunities at
home, particularly when they come from rural areas; looking for work in
other countries, therefore, is the most attractive option for many (UN, 2016).
Background reasons at the governance level as articulated also by the Nepali
government itself have been a lack of clear visions and policies with regard to
the creation of employment opportunities, including identification of potential
growth sectors and areas of productive investments. Although some
employment and poverty alleviation programs were launched by the
government, such as the ‘Karnali Employment Program’, the ‘Western
Upland Poverty Alleviation Project’, or the ‘Nepal Food Security Program’,
these initiatives have not been sufficient to absorb the ever-growing labour
force (MoF, 2012). As political conflicts and failed promises of political
parties also use to deceive their expectations desperate people feel urged to
42
This provision was established after the Treaty of Friendship and Peace in 1950 between
Nepal and India (Sijapati & Limbu, 2012).
 68

find suitable alternatives abroad to improve their economic situation and

strengthen their social security.

4 Composition

Skill level
Although no solid statistical data are available about the educational and skill
level of out-going labour migrants as they are no collected by official
institutions (GoN, 2014), there is generally no doubt that the overwhelming
share of the international migrants from Nepal is unskilled or low-skilled.
Nepal, in addition, registers an important outflow of highly educated, and a
considerable share of the country’s international students - whose number has
increased from 19,525 in 2008 to 31,312 in 2014 (UNESCO, 2016)43 - do not
return after having graduated abroad44.

Migrants’ origin
More than half of Nepal’s officially registered international migrants (50.4%)
come from the Terai, 44% from the Hills, and 5.7% from the Mountains
(DoFE, 2014). In terms of development regions, the Central region was on top
with 33.3%, followed by the Eastern with 31.4%, the Western with 21.8%, the
MD Western with 10%, and the close-to-India Far Eastern region with 3.6%
of the officially registered out-migrants, as revealed by a survey by the
Ministry of Land Reform and Management (DoFE, 2014). According to the
2011 population census, the overwhelming share (more than 85%) of the
international migrants came from rural areas (NLSS, 2011).

43
The major host countries in 2014 were the USA (with 27% of the total), Australia (with
23%), India (with 22%), and Japan (with 8%) (UNESCO, 2016).
44
See for example Nepal & Knerr (2015): In their survey among Nepalese students in
Germany they found out that less than half of the master students (42%) and just 12.7% of
the PhD students intended to return to Nepal after completion of their studies.
 69

Gender composition
94% of Nepal’s international migrants are male (based on GoN, 2014, figures
from FY 2013/14). The marginal share of females is mainly due to the fact
that recruitment agencies are not allowed to place domestic workers which is
the major work domain of women45 (GoN, 2014), and also, that in the
Nepalese society, it is difficult for females to get the family’s permission for
working abroad. Still, over the early 21st century female out-migration from
Nepal displays growth rates which are about the double of those for males
(GoN, 2014: 28).
According to official GoN statistics the highest absolute number of female
Nepalese migrants is found in Kuwait, followed by UAE, Malaysia and Qatar,
while their share in the total number of Nepalese migrants is particularly high
in Cyprus, with 95%, and also in Lebanon, and Israel where they mainly work
as caregivers (GoN, 214). These official data about female migrants provided
by the government probably are considerably below the actual figures yet,
because substantial unregistered movements are taking place, via Delhi in
India to Malaysia, South Africa, or Dubai, mostly assisted by brokers
(reported, e.g., by Nagarik News, 2013), and women are more likely to
choose such ways than men due to the restrictions imposed on them by
official migration regulations.

45
In the period FY 2008/09 to 2013/14, almost 80% of the male but just 42.5% of the
female labour migrants used the services of recruitment agents (GoN, 2014).
 70

5 Legal Framework and Bilateral Agreements

Employment Acts
Since the mid-1980s international migration from Nepal has been framed by
Foreign Employment Acts. With the growing outflow of labour migrants, the
Nepalese government started new policy strategies to improve their
conditions, including the introduction of legal regulations and the conclusion
of bilateral agreements with various host countries (Sijapati & Limbu, 2012).
Nepal’s first Foreign Employment Act (FEA)46 was passed in 1985, in
response to the growing attraction of the Gulf States for Nepalese labour
migrants. It specified countries to where Nepalese migrants were encouraged
to move, and facilitated private sector initiatives for international employment
agency (GoN, 2014). The enactment of the novel FEA in 2007, in addition
claimed to create a safe, well-organized and decent environment for foreign
employment. By this, it marks the beginning of a new area in the official
regulation of international migration from Nepal, characterized by structural
changes in out-migration; and improvements in the migration-related data
base which is an essential pre-condition for sound and effective policy
strategies. The FEA 2007 regulates and simultaneously promotes foreign
employment agencies; aspires to protect the rights and welfare of those
working abroad; and restricts the operation of unlicensed foreign employment
agents. Prior to sending a worker abroad, employment agencies are obliged to
get an approval from the DoL47. Also, anyone can apply personally and
directly for foreign employment without making use of an agency.
With the intention to protect the workers abroad, a number of regulations
were included. The DoL may also specify minimum remuneration for the

46
It defines foreign employment as “the employment received by workers in foreign
country and the workers as Nepalese citizen receiving foreign employment”.
47
To obtain a license, the applicant has to pay a license fee of three million NRs which is
to be renewed every year (FEA, 2007).
 71

workers going abroad, and fix upper limits for the service charge and
promotional cost they have to pay to their agent. The 2007 FEA also
established a Foreign Welfare Fund, to be used for offering skill-training for
out-going workers; launch employment oriented programs for returnees; and
provide financial aid to the workers and/or their families in cases of accident
or death. It also prohibits gender-based discrimination in worker selection;
promises to send labour attachés to countries where more than 5,000 Nepalese
labour migrants are located; allows concluding bilateral agreements with
foreign countries; and grants special privileges in worker selection to women,
people from remote areas and indigenous communities, as well as oppressed
and depressed classes of the society. Details for the implementation of the
2007 FEA were laid down in the Foreign Employment Regulation (FER),
passed in 2008.
In spite of the essential role international labour migration plays in Nepal’s
socio-economic and political space since the 1990s, an explicit strategic
Foreign Employment Policy (FEP) was endorsed only in 2012, with the
declared objective to develop skilled, empowered, and competitive Nepalese
labour resources to meet the demand of the international market while at the
same time creating a safe, and decent environment for foreign employment.
The FEP aims to support the overriding national goals of poverty reduction,
and sustainable economic and social development by the benefits of foreign
employment. For that purpose, seven action areas were defined: 1) to identify
and promote employment opportunities in international labour markets; 2) to
develop competitive and skilled labour resources for foreign employment; 3)
to create transparent, reliable, systematic and safe foreign migration
processes; 4) to address issues and rights of female workers; 5) to ensure good
governance in foreign employment management; 6) to mobilize local,
national and international resources for managing foreign employment; and 7)
 72

to mobilize remittances for human development and productive sectors.

(GoN, 2014)
To reach the outlined goals, also host-country specific actions were taken. To
organize Nepali migrants’ employment abroad and to regulate their
contractual basis under the laws, rules and procedures of source as well as
host country, the Nepalese governments signed Memoranda of
Understanding, for example with Qatar in 2005, the UAE in 2007, South
Korea in 2007, and Bahrein in 2008 (Sijapati & Limbu, 2012). Also,
numerous targeted measures have been initiated, such as measures to improve
the skills of migrant workers to enhance labour migration to Qatar or reaching
an agreement on a minimum wage rate and organizing direct flights from
Kathmandu to Qatar’s capital Doha (NIDS, 2011)48. In the early 2000s, when
Korea and Japan began to occur as promising destinations, the Department of
Foreign Employment established separate offices for these countries49 (MOF,
2012).

6 Remittances
With the sharply rising international labour migration Nepal has seen a
dramatic rise in the inflow of remittances, from US$ 111 million in 2000 to
almost US$ seven billion in 2016 (World Bank, 2016; Fig. 2). In 2005
remittances outpaced the Nepal’s revenues from the export of goods and
services for the first time, and since then the difference has increased fast;
since the mid-2000’s they amount to a multiple of each single other source of
foreign exchange, namely exports of goods and services, tourism receipts, and

48
Moreover, a detailed Directive for Nepalese Technical Interns to enter Japan was
established in 2009 (Sijapati & Limbu, 2012).
49
This are the EPS (Employment Permit System) Korea Section and the JITCO (Japan
Training Cooperation Organization) Section International Training Cooperation
Organization) section
 73

official development aid (based on data from World Bank, 2016). At the same
time, the share of remittances in the country’s GDP has steeply increased,
reaching 32% in 2015 (World Bank, 2016b).
These remittances flows have also proved resilient in times of international
economic disturbances. In spite of the onset of the global economic crisis in
2007, the growth of remittances gained momentum in that year, crossing the
two billion mark with a growth rate of 57%, and the upward trend persisted in
2009 despite the on-going crisis.

Fig. 2: Remittances inflow to Nepal

8000
7000
Remittance (US $ Million)

6000
5000
4000
Remittance inflow
3000
2000
1000
0

year

Source: World Bank (2016)

The highest amounts of remittances come from Qatar, with US$ 1.683 billion,
and Saudi Arabia, with US$ 1.598 billion in 2014 (Fig. 4). Although Malaysia
absorbs by far the largest number of Nepalese migrant workers it only ranks
seventh in terms of remittances, with just US$ 155 million.
 74

Fig. 4: Top-ten remittance sending countries to Nepal (millions of US$)

1.800 1.683
1.598
1.600
1.400
1.200
1.000 832
800 666
600
400 282 232
155 117 91
200 51
0

Source: Based on data from World Bank, 2016

Because migrants also use various informal channels for sending remittances,
such as the Hundi system, transfers by friends and relatives, or own hand-
carrying, the actual inflow of remittances is considerably above the officially
recorded. As estimated by Ozaki (2012), the share transferred through
informal channels reached 55% of total remittances in 2011. It has been
particularly high in the case of India because of its proximity and free border-
crossing. According to NLSS (2011), just 8.5% of the total remittances from
there are sent through registered financial institutions, while from Qatar,
Malaysia, and Saudi Arabia this applies to 64%, 81%, and 73% respectively
(NLSS, 2011).
According to the NLSS household survey, 55.8% of Nepal’s households
received remittances in FY 2010/11 (up from 23.4% in 1995/96), around two
third of those in the Terai and half of those in the Hills and Mountains (NLSS,
2011; see Table 2). On average, they obtained NR 80,436 of which more than
80% came from abroad (including about 11.3% from India). 80% of these
transfers were used for daily consumption, 7% for loan repayment, 5% for
 75

acquiring household property, 4% for education, 2% for capital formation,

and 3% for other purposes (NLSS, 2011).

Table 2: Composition of remittance flows to households in Nepal

Description 1995/96 2003/04 2010/11
Share of all household receiving remittances (%) 23.4 31.9 55.8
Average remittances per recipient household (NRs.) 15,160 34,698 80,436
Share of remittances received by households (%)
from within Nepal 44.7 23.5 19.6
from India 32,9 23.2 11.3
from other countries 22.4 53.3 69.1
Nominal per capita remittance received for all Nepal (NRs.) 625 2,100 9,245
Source of data: NLSS, 2011

7 Conclusions
International labour migration and remittances are decisive determinants of
Nepal’s economic and social development and essential elements of its policy
strategies. A highly relevant question in this context is how far they will
benefit the country’s development in the longer run, and what the
governments’ tasks are to manage these flows adequately to the benefit of the
population. Although the brief factual overview presented does not venture to
embark into solidly-based forecasts, some ad-hoc assessment founded on
theoretical considerations and empirical evidence will be offered.
Over the near future, mobilizing remittances for productive investment
remains a key challenge for policy makers in Nepal. Frequently, the hope is
expressed that the inflowing remittances – via investment activities - will
provide the receiving families as well as the country as a whole a basis for
overcoming the dependence on the transfers from abroad for securing
livelihoods. However, much remains to be done. In 2016, the UN complained
that a too small share of the remittances has been spent for investment in
 76

productive sectors which would create avenues for breaking the migration
cycle and significantly stimulate Nepal’s economic development (UN, 2016).
Moreover, at the macro-level the large-scale inflow of remittances may leave
the country with a deformed economic structure. In particular, it appears to be
prone to Dutch Disease symptoms, i.e. adverse exchange rate effects, as has
been observed in other low-income labour-exporting countries since decades
implying reduced competitiveness on the world market for their exports, and a
bias towards non-tradeable products, like services, in the domestic production
structure (Sapkota, 2013; Knerr, 1998).
Tensions between the winners and the losers in the “remittance economy”
threaten social cohesions at the local, regional and national level. The relative
poverty and marginalization of households which are unable to send migrants
increases, both as a result of the widening income distance to remittance-
receivers as well as the rising prices of non-tradeable products.
Since the start of the migration and remittance boom, the Nepalese
government has undertaken a number of efforts to better protect the country’s
international labour migrants, including guidelines for the domestic policy,
regulations for intermediaries, and bi-lateral agreements. However, as
agreements de facto are difficult to control and workers remain in a dependent
position when trying to find overseas employment and when working in the
host country, ample loopholes for exploitation persist, e.g. by charging them
high recruitment fees or squeezing indecently long working hours.
A serious challenge for Nepal’s development is the loss of highly-qualified
labour force to other countries in the intensifying global race for talents. As
human capital is the key to economic progress, and, turning the argument
around, without it economic progress would hardly be possible, Nepal’s
government might be well advised to put a keen focus on retaining, resp. re-
attracting its high-skilled and also in convincing its labour force to invest in
 77

the training of skills which are more needed at home than for overseas
employment.
Of growing concern is environmental degradation as an increasingsly
powerful driver of distress migration from Nepal. As emphasized by Massey
et al. (2007), in the early 21st century environmental degradations that erode
the agricultural production conditions dramatically enhance the likelihood of
migration.
Consideration of these aspects demonstrates how closely international labour
migration is interwoven with other policy areas, emphasizing the requirement
to integrate it into any future-oriented plans for the country’s overall well-
being.

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 80

Annex

Table A1: International labour migration from Nepal1)

Country Malay- Qatar Saudi UAE Kuwait Bahrain Oman South Hong- Other Total
sia Arabia Korea kong
2002/03 43802 26850 17,990 12650 907 818 380 712 564 374 105,047
2003/04 45770 24128 16,875 12760 3194 606 73 1324 672 1268 106,670
2004/05 66290 41952 13,359 12503 1684 240 305 325 178 822 137,658
2005/06 84162 58233 19,507 17184 738 530 77 196 176 1389 182,192
2006/07 74029 59709 39,279 25172 2441 1200 509 765 361 1068 204,533
2007/08 50544 85442 42,394 45342 1967 5099 2626 146 199 15282 249,041
2008/09 35070 76175 48,749 31688 2291 6360 4247 2888 65 12432 219,965
2009/10 113500 57086 63,391 33290 8145 4234 3285 2532 102 8529 294,094
2010/11 105906 102966 71,116 44464 15187 4647 2442 3728 n.a. 4260 354,716
2011/12 98367 105681 80,455 54482 24575 5865 3163 5627 n.a. 6450 384,665
2012/13 157212 86126 85,837 51419 7890 4 255 3 931 n.a. n.a. n.a. 388,484
2013/14 206719 103850 75,026 42542 8979 4418 3 952 n.a. n.a. n.a. 437,116
2014/15 196,497 124,050 96,887 53094 9,634 4 168 4 168 n.a. n.a. n.a. n.a.

1)
excluding India
Source: MoF, Nepal; DoFE (2015)
 81

Part II

Remittances, Living Standards and Food Security

82
 83

Determinants and impacts of international remittances

on left-behind families in rural regions of Eastern Nepal
Ranjita Nepal and Béatrice Knerr

1 Introduction
Labour migration is a prevalent feature of economic development (Mendola,
2010), and a major livelihood strategy for the population of low-income
countries50 like Nepal, a small landlocked country with a population of around
27 million and a per capita gross national income (GNI) of US$ 716 () where
agriculture is the major source of income for most, employing 74% of the
labour force and contributes 33% to the Gross Domestic Product (GDP)51
(CBS, 2012; MoF, 2012 and 2015).
Under these conditions, the role of migration and remittances for Nepal’s
economic development, in particular for reducing poverty, has been widely
acknowledged by the government of Nepal and international organizations
(CBS, 2004; Lokshin et al., 2010). However, at the same time it is not well
understood who eventually profits from the money the migrant workers earn
and send home, what determines the amount of transfers received by their
families, and how far they really contribute to individual poverty alleviation
and to the fulfilments of basic needs.
Our research wants to add primary empirical information to this policy-
relevant knowledge gap by investigating the determinants of remittances
receipts at the household level and examining the relationship between

50
The World Bank (2015) classifies countries with a per capita GNI of US$ 1.00 and less
as low-income countries.
51
Data are of 2013.
 84

received remittances and expenditure patterns. For that purpose we conducted

a comprehensive socio-economic survey among 542 migrants’ and non-
migrants’ households in East Nepal.
The remainder of the paper is structured as follows: Section (2) illustrates the
conceptual framework of our research. The study area and the description of
data and variables are presented in section (3). Section (4) explains the data
analysis, including the model specifications. Section (5) presents the results
which are discussed in the concluding section (6).

2 Conceptual framework
The objective of this research is to identify the factors that determine the
receipt of remittances as well as their implications at the household level. As a
its theoretical foundation it starts from the New Economics of Labour
Migration (NELM) model which considers the household as the major unit of
analysis for migration and remittances decisions (Stark & Bloom, 1985). For
reducing income risks, the household intends to diversify its portfolio of
labour resources by delegating members to work in other places that are not
subject to the same kind of challenges it has to bear itself, respectively not at
the same time. In return, remittances are expected from the migrant in case of
need. The strategy of investing into the migration of members is also applied
to compensate for deficient capital markets, whereby remittances are used as a
means for financing productive household investments and providing social
security in cases of sickness or old age.
The hypotheses deduced from this theory are tested on the basis of a
quantitative household survey using a structured questionnaire which was
designed in accordance with the research questions. Accordingly, it
comprised the aspects household characteristics, physical capital, assets, and
regional dummies which are hypothesized to influence the households’
 85

likelihood of receiving remittances. Fig. 1 outlines the conceptual framework

for analysing the determinants of remittances.
Deriving from NELM, remittances are also considered to have a positive
impact on the economy of the receiving countries as they help the migrant
sending households to overcome production and investment constraints
(Taylor, 1999). Moreover, remittance spending is expected to have multiplier
effects and promote local development in the migrants’ regions of origin. Our
study, focuses on evaluating the impact of remittances on household
expenditure patterns (mainly on the basic needs categories food, education
and healthcare), and conclusions with regards to higher level implications are
to be drawn only indirectly.

Fig. 1: Determinants of remittances – conceptual framework

Independent Variables

Household characteristics Physical capital Regional dummies

˜ Size ˜ Land ownership ˜ Urban/rural area
˜ Age of head ˜ Asset index ˜ District
˜ Education of head Quality/structure of
˜ Education of adult members housing
˜ Occupation of head ˜ Debts
˜ Ethnicity/Caste group
˜ Family structure

Dependent variables:
Remittances / Use of remittances

Source: Authors’ concept

The concept displayed in Fig. 1 is expressed in formula (1)

R = f (hh’s characteristics; hh’s physical capital; regional dummies) (1)
where R=remittances, hh = household.
 86

3 Study area and data collection

3.1 Study area

The districts Sunsari and Jhapa were selected purposively from the Eastern
Development Region (EDR), because of their similar level of development as
compared to other districts of the Eastern region in terms of geo-physical
conditions, population structure, farming systems, and physical
infrastructures, and also because the researchers were well acquainted with
the area.
Both districts are situated in the (plain) Terai region of Nepal, adjacent to the
Indian border (see Annex Fig. A1 and A2). Jhapa covers an area of 1,606 km2
and Sunsari one of 1,257 km2.
In fiscal year (FY) 2013/14, 18,762 labour migrants left Jhapa district via
recruitment agencies, which is more than the eight-fold of FY 2008/09;
72,466 left Sunsari, an increase by more than the 16-fold as compared to FY
2008/09 (see Table 1). 4.9% of the migrants from Jhapa and 2.4% of those
from Sunsari were women.

Table 1: International out-migration from Jhapa and Sunsari Districts1),

FYs 2008/09-2013/14

District 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 Total

Jhapa 9,535 10,618 11,004 11,778 17,974 18,762 79,671
Sunsari 4,410 5,923 6,620 7,623 11,597 12,858 72,466

1) Incl. only those moving via recruiting agencies (almost 80% of Nepal’s international
labour migrants move via recruiting agencies).

Source: Government of Nepal (2015) and authors’ calculations

 87

3.2. Survey design

In compliance with the conception of NELM, households were treated as the
unit of analysis. The survey covered both migrants’ and non-migrants’
households in the study area, whereby migrants’ households are defined as
those of which one or more household members had migrated to other
countries during the twelve months preceding the survey. A structured
questionnaire was designed to collect data about the households’ demographic
conditions, their income and expenditures, assets, housing conditions, and
investments; about the migrants’ personal characteristics; and about the
channels and frequency of remittances receipts. Migrants as absent household
members were persons who had been living in the same house with the
present household members before migration and claimed to join that same
household after their return.
For the household survey, we used a multistage sample design following
Muriuki et al. (2010). The districts were further stratified into municipalities
and village development committees (VDCs), and one urban and two rural
areas from each district were chosen using stratified sampling. The four
VDCs, Lakhanpur, Juropani, Baklauri and Mahendranagar, and the two
municipalities, Damak and Dharan were selected in view of the high
concentration of international migrants there. Distance from the municipality
was considered as a major criterion for selecting the specific rural areas. As
such, one village was situated closer to the city and the other one further (15-
20 km) away. The urban and rural areas were additionally stratified into
Wards, which is the smallest administrative unit in Nepal. The Wards to be
visited for the survey were selected randomly. Following Durand et al.
(1996), we adopted snowball sampling for choosing the households to be
interviewed, as the respondents’ households could not have been found by
random sampling. Assumed to have in-depth information on household
matters and the migrant’s characteristics, the head of the household or the
 88

spouse of a migrant, whoever was available in the house, was selected as a

respondent for the interviews. Overall, the sample size of 542 households,
consisting of 271 households from each district, was accepted for a solid
statistical analysis.

4 Data analyses
The main purpose of our data analysis is to find out what determines the
receipt of remittances and whether remittances appear as a significant
explanatory variable in the household’s expenditures structure (the
descriptions of the variables are shown in Table A2).

4.1 Model specifications

Model I: Determinants of remittances receipt

As the criterion variable is dichotomous (receiving remittances or not) and the
predictor variables are categorical and/or continuous, logistic regression was
applied. The corresponding model is specified as shown in equation (2).

Ln [pi (1-pi)-1] = β0 + β1X1,i +……….+ βkXk,i (2)

where p is the probability of the household to receive remittances, subscript i

denotes the ith observation in the sample β 0 is the intercept term; and β1…. βk
are the coefficients associated with each independent variable X1….Xk.
(Neupane et al., 2002; Thapa & Rattanasuteerakul, 2011).
Receiving remittances is the outcome variable, which obtained the value of 1
if the household had received remittances in the preceding 12 months, and 0
otherwise. The explanatory variables included in the model are household
characteristics, physical capital and regional characteristics. Altogether, 31
 89

independent variables were included in the model (they are listed in Annex
Table A1).
In order to examine possible age and gender roles in migration decisions, the
household characteristics are classified into various components in terms of
age and sex of the household members. Following Adams and Page (2005), it
is assumed that the number of children who are old enough to migrate for
work and who send remittances increases with the age of the household head.
The occupation of household heads is categorised into the six groups
agriculture, services, trade/business, wage earner, others, and unemployed.
Choosing those with the main occupation in agriculture as the reference
group, five dummy variables representing the other groups were created.

Model II: Determinants of households’ expenditures

Since the dependent variables - household’s annual expenditures on food,
education and healthcare - are quantitative, a linear regression model was
considered as the appropriate analytical tool. The mentioned expenditure
categories are influenced by a set of independent variables in the model
specified as shown in equation (3).

Y = a+b1X1+b2X2+…..+ bkXk+ Ԑ (3)

where the vector Y denotes the respective expenditure categories annual

expenditures on food, education, and healthcare; X1…..Xk the explanatory
variables; the term “a” the constant; b1.…bk the coefficients of the
independent variables; and Ԑ the residual.
For Model II, the occupation of household heads is divided into three broad
categories: agriculture, non-agriculture and unemployed. From this, two
dummy variables were created (non-agriculture and unemployed), with
occupation of household head in agriculture as the reference factor.
 90

4.2 Specification of the independent variables

Ethnicity is categorised into five groups: Brahman/Chhetri, Hill Janajati, Terai
Janajati, Newar, and Hill/Terai Dalit. According to the Hindu religion, the
Brahman/Chhetri ethnicity belongs to the higher hierarchy. The Hill/Terai
Dalits, in contrast, are a relatively deprived and disadvantaged group in
Nepal. Our model uses the Brahman/Chhetri people as the reference group.
Having an extended family is supposed to influence migration as the younger
members of prime working age can migrate for work, while other household
members in particular the elder ones stay at home to take care of the
remaining family, the farm and the properties. Therefore, households
including such family structures are expected to have a higher probability of
having migrant members as well as to receive remittances. In our model, the
nuclear family is chosen as the reference category.
Numerous studies claim that transnational social networks facilitate the
migrate decisions as they provide information about the costs and benefits of
moving to various destinations and the ways to get there, as well as support in
settling down and finding employment, which may significantly reduce the
transaction costs (e.g. Görlich & Trebesch, 2006; Bohra-Mishra & Massey,
2011). Thus access to such networks enhances migration, pathing the way to
employment opportunities, better-paid jobs, and remittances.
The asset index includes 16 durable consumer goods52 in the migrants’
households. An item was given a value of 1 if it was in the possession of the
household and 0 otherwise; hence the sum of all scores could take a
maximum value of sixteen. This procedure closely follows the one used by
De Haas (2006) and Ponce et al. (2011).

52
These items are TV, computer, camera, video camera, rice-cooker, radio, DVD player,
refrigerator, gas stove, motorbike, electric fan, cassette player or radio, mobile phone, land
phone, electric iron, mixer grinder, cooking liquid gas, bio-gas, bicycle and motorcycle.
 91

Households’ income was calculated by including six different sources:

agriculture, services, trade or business, rent, wages, and pension. After the
computation of household income, households were ranked according to their
income level and then split into quintiles to capture how migration and
remittances vary across different household income groups. The first (poorest)
income quintile serves as the reference category.
If the standard deviations of a variable are not constant, heteroskedasticity
appears. To avoid this problem, we applied robust standard errors as
suggested by Vanwey (2003 and 2004), who used this method in logistic
regression when analysing determinants of migration and remittances.

5 Results and discussion

5.1 Descriptive analysis of personal characteristics

The survey results show that the migrants of our sample were predominantly
male (94%), with an average age of 33 years. This is largely consistent with
the 2001 population census of Nepal, which presents about 90% of
international migrants as male. Almost 40% of migrants in our sample had
been unemployed and 30% had been employed in agriculture before moving
abroad. On average, they had 10 years of education. The complete descriptive
summary of the variables used can be found in Annex Table A3.
Migrants’ households were larger than those of their counterparts without
migrants. They also enjoyed higher annual incomes, even without
remittances, and spent a larger share of their expenditures on food, healthcare,
and education than the non-migrants’ households.
 92

5.2 Factors influencing the likelihood of receiving remittances

More than 95% of the migrants’ households in our survey reported to have
received remittances. Table 2 shows the results of our regression analysis. Out
of 31 independent variables, eight were found to have significantly influenced
the probability of households to receive remittances: age squared of
household head, being a female-headed household, the number of household
members aged 15 to 60 years, belonging to Hill Janajati ethnicity, being an
extended family, and possessing a house with a semi-permanent structure all
turned out to be positively related to the likelihood of receiving remittances,
while age of the household head, which, in contrast, shows a significantly
negative relationship.
A one year increase in the age of household head, c.p., reduces the probability
of receiving remittances by 8%. In contrast, having one more man aged
between 15-29 years increases the probability of receiving remittances by
13%, and one more man between 30-60 years in the household by 24%age
points. Female-headed households are 64% points more likely to receive
remittances than male-headed ones; being from “Hill Janajati” ethnicity
increases it by 19%-points; having an “extended family” by 13%-points; and
possessing a house with a semi-permanent structure by 20%-points.
 93

Table 2: Households’ likelihood to receive remittances

Independent variables Coefficient Marginal effects

Household characteristics
Age of head of household (years) -0.354*** -0.079
Age squared of head 0.004*** 0.001
Sex of head, male+ - -
Female headed household (Dummy) 3.074*** 0.643
Household members
Dependents aged 0-4 years 0.012 0.003
Dependents 5-14 and >60 years -0.017 -0.004
Women aged 15-29 years 0.292 0.065
Men aged 15-29 years 0.581*** 0.130
Women aged 30-60 years 0.061 0.014
Adult men 30-60 years 1.056*** 0.236
Occupation of hh head
Agriculture+ - -
Service (Dummy) -0.444 -0.010
Business (Dummy) -0.484 -0.103
Wage earner (Dummy) -0.915 -0.173
Others (Dummy) 0.184 0.042
Unemployed (Dummy) 0.646 0.152
Ethnicity
Brahman/Chhetri+ - -
Newar (Dummy) 0.749 0.180
Hill Janajati (Dummy) 0.803** 0.189
Terai Janajati (Dummy) -0.604 -0.122
Hill/Terai Dalit (Dummy) -0.100 -0.022

Family Structure
Nuclear+ - -
Extended (Dummy) 0.545* 0.126

Human capital
Education of hh head (years) -0.062 -0.014
Education of hh head squared -0.001 0.000
No. of adults with higher education -0.143 -0.032

Physical Capital
Land holding (hectares) -0.373 -0.083
Landholding square 0.058 0.013
Asset index 0.087 0.019
Household debt (Dummy) -0.186 -0.042

Table 2 continued on next page

 94

Independent variables Coefficient Marginal effects

Housing structure
Permanent+ - -
Semi-permanent (Dummy) 0.851** 0.200
Temporary (Dummy) 0.572 0.130
Other (Dummy) 0.696 0.167
Region
District
Sunsari+ - -
Jhapa (Dummy) 0.337 0.075

Location/region
Urban+ - -
Rural (Dummy) 0.443 -0.073

Constant 4.504
Number of observation 542
Wald chi2(29) 153.02***
Pseudo R2 0.357
Log-likelihood -230.070

Notes: + indicates the reference category; *, ** and *** stand for significance at the 10, 5
and 1 % level respectively.

Source: Authors’ own calculation

5.2 Determinants of household expenditures

Details of the determinants of households’ expenditures on food, education,
and health are shown in Table 3.

Food. The amount of expenditures for food was significantly determined by

received remittances, the number of household members aged up to four
years, above 59 years, men between 15 and 29 years, household heads
employed in non-agricultural occupations, the size of the household’s
landholdings, landholdings square, the asset index, having a house with
temporary structure, belonging to the fourth or fifth income quintile, and
living in a rural area. Altogether, these variables explain 50% of the variations
 95

in food expenditures. The model is overall highly significant with an F-values

of 19.46.

Education. Overall, 29 independent variables were used to explain their

relationship with educational expenditures.53 Children up to four years of age,
young men between 15 and 29 years, adults with higher secondary education,
the amount of assets possessed, belonging to the fifth income quintile, and
living in Jhapa district significantly explain 24% of the variation in
households expenditures for education. The model is overall highly
significant with an F-value of 6.08.

Health care. The nine variables received remittances, household members

aged above 60 years, belonging to the Newar, Hill Janajati, or Terai Janajati
ethnicity, size of landholding, landholding squared, the amount of assets, and
a house with a semi-permanent structure explain 12% of the variation in the
expenditures for health care, with a highly significant F-value of 3.97.

53
The variable square of land holding was dropped from the model, as there was no effect
on educational expenditures.
 96

Table 3: Determinants of food, education, and health expenditures

Coefficients
Independent variables Food Education Health

Received remittances (Dummy) 6700.637** -516.7479 4985.054**

Household characteristics

Dependents aged 0-4 years 7879.595** -7575.414*** 1208.348

Females aged 15-29 years -1459.648 386.914 -163.405
Males aged 15-29 years 4623.145 ** 4680.103*** 512.012
Females aged 30-60 years 517.248 300.852 873.999
Males aged 30-60 years 3131.906 1591.967 -1200.660
Dependents above 60 years 3984.833* 964.586 1880.429*
Age of hh head (years) -62.506 -130.901 122.230
Sex of hh head
Male+ - - -
Female (Dummy) 1921.494 4318.046 -1824.646

Employment sector of hh head

Agriculture+ - - -
Non-agriculture (Dummy) 5730.463* -977.740 -1831.365
Unemployed (Dummy) 4346.095 8274.406 -800.964
Ethnicity/Caste group
Brhaman/Chhetri+
Newar (Dummy) 8721.368 - 333.795 -5626.654***
Hill Janajati (Dummy) 1684.021 -1394.139 -5986.752***
Terai Janajati (Dummy) -869.941 -3084.873 -2560.391*
Hill/Terai Dalit (Dummy) 2415.800 -3167.534 -945.738
Human capital
Education of hh head (years) - 414.935 213.508 -69.222
Adults with higher education -1261.789 2887.841** 282.388
Physical capital
Landholding (hectares) -10245.38** 528.0932 3424.021*
Landholding square 4142.306*** - -936.050**
Asset index (average number)a) 2550.073*** 1178.642*** 384.863*
Housing structure
Permanent+ - - -
Semi-permanent (Dummy) -5366.66 -3793.322 -4176.619**
Temporary (Dummy) -6285.062* -2400.086 -3199.959
Others (Dummy) -1785.852 2637.182 -3514.171

Table 3 continued on the next page

 97

Coefficients
Independent variables Food Education Health

Income quintile
Quintile 1+ - - -
Quintile 2 (Dummy) -2024.213 -447.614 -69.04701
Quintile 3 (Dummy) 579.9921 2661.651 -1401.443
Quintile 4 (Dummy) 12800.09*** 4254.403 -874.001
Quintile 5 (Dummy) 20790.06*** 16656.14** 4486.018
Location/region
Area
Urban+ - - -
Rural (Dummy) -28860.05*** -1846.758 -1484.947
District
Sunsari+ - - -
Jhapa (Dummy) -2285.556 8398.883*** -1870.592
Constant 35117.09*** -2030.673 4982.898
Number of observation 542 542 542
F =19.46*** F= 6.08*** F= 3.97***
R2 = 0.4981 R2= 0.2419 R2 = 0.123
Notes:
+) indicates the reference category
a) The asset index was created by noting the presence of 16 different consumer goods. The
average number clarifies that it is no categorical variable.
*, ** and ***) stands for significance at the 10, 5 and 1 % level respectively.

Source: Authors’ calculation

5.3 Discussion

Likelihood of receiving remittances

Our results show that the likelihood of receiving remittances decreases with
the age of the household head, i.e. those with younger ones are more likely to
receive remittances than those with elder ones. Also, female-headed
households have a higher probability of receiving remittances than their male-
headed counterparts, which is in line with information provided by IOM
(2011), and also other country case studies, for example, with Amuedo-
Dorantes’ and Pozo’s (2006) results from the Dominican Republic. It may be
explained by the fact that, in the absence of adequate social security or other
 98

safety nets, women are receiving remittances either from their spouse or from
their children to secure their livelihood (Pfau & Giang, 2010). Households
with larger shares of young men in working age are more likely to receive
remittances to secure their subsistence and survival, reflecting the necessity
for men in working age to cope with their responsibilities of supporting one’s
family. Also, as the number of economically active males in a household
increases, it becomes easier to compensate for the loss of out-migrated labour
force and family responsibilities, so it is more likely to find a migrant in a
larger household with more men than in a household having only one male.
Consistent with previous studies of migration from Chitwan (Bohra &
Massey, 2009), the “Hill Janajati” ethnic groups display a higher probability
to receive remittances than others as its members traditionally are more
inclined to migrate. They have historically been involved in joining the
British Army, where they are still active in considerable numbers. Having an
“extended family” also increases the likelihood of receiving remittances as
compared to nuclear families. This result corresponds to other empirical
studies, e.g. by Sana and Massey (2005), who found a higher likelihood of
receiving remittances for extended families in the Dominican Republic. The
plausible explanation for this is that larger households can more easily
diversify their labour portfolio and sent some members for work to other
places.
Pressing a house with a semi-permanent structure is associated with a higher
probability of receiving remittances. This result seems to contradict the
findings of Bohra-Mishra and Massey in Chittwa (2011) where they found
that members of relatively less affluent Nepalese families migrate abroad for
work. However, their study focuses on international migration from central
Nepal to India, which is usually cheaper than to migrate to other destinations.
Also, in our study it is not sufficiently clarified if the higher-quality houses
 99

had been built with the support of remittances, so that causalities would run in
the opposite direction.

Food expenditures
Households’ food expenditures significantly increase with remittances as they
provide additional financial means for that purpose. This finding seems to
contradict some others, for example by Castaldo and Reilly (2007) who, in
their empirical study in Albania, found that households receiving international
remittances at the margin spend less on food than those who didn’t. However,
considering Engel’s Law, saying the income elasticity of demand for food
decreases with increasing income (Mokyr, 2005), and comparing the per-
capita income of both countries (with that of Albania’s at US$ 4,569, and that
of Nepal at US$ 703 in 2014) (World Bank, 2017)), rather suggests that
Nepalese migrants’ households belong to much poorer income strata where a
higher income allows to buy better-quality food. The number of children up to
four years as well as that of dependents elder than 60 years in a household
contributes to increase its food expenditures. Also, in generally, households
with more young males between 15 and 29 years show higher expenditures on
food items because persons of this age group consume more food due to their
body growth, and also because they are in the prime working age and usually
occupied with arduous manual work. With a household head working in a
non-agriculture sector, households also tend to have higher food expenditures,
which is explained by the fact that people outside the farming sector have to
purchase food for their survival for lack of subsistence production.
Household expenditures on food items decrease with the size of landholding,
probably because in subsistence farming systems, farmers try to ensure food
security by growing crops for their own household consumption rather than
for commercial purposes.
 100

Households belonging to the 4th and 5th income quintiles spend more on food
than other groups, which is largely explained by their higher incomes. Also,
households possessing more assets spend more on food than those with fewer
assets due their higher purchasing power. In contrast, households being poor
in material resources, as indicated by living in a living in a house with a
temporary structure, expend less on food. This also applies to households in
rural regions as compared to those in urban areas, as they usually are engaged
in own food production to some extent, and also because food prices tend to
be lower in rural than in urban areas.

Expenditures on education
Remittances did not show any significant influence on expenditures for
education. Hence, against our expectations, the analysis does not provide any
evidence that remittances contribute to human capital building in terms of
educational expenses, in contrast to the results of numerous studies from
other countries which have demonstrated that remittances in general enhance
a household’s spending on educational activities as well as its member’s
educational attainments (see, e.g., Yang, 2008; Khan, 2007; Cox Edwards &
Ureta, 2003).
The number of dependents aged up to four years is significantly negatively
related to educational expenditures, as these children do not go to school yet
and hence do not cause costs for formal education, while it can be assumed
that households with such small children have comparatively less children in
schooling age. The number of males aged 15 to 29 years, in contrast,
increases the household expenditures on education. Interestingly, this does not
apply to females of the same age group, which can be explained by the fact
that in Nepal sons enjoy more privileges than daughters and – with a view to
their future social security - parents mostly invest in the education of their
boys, as daughters are expected to leave their studies after completion of high
 101

school or even earlier to get married and afterwards move to their husband’s
family’s house.
The households’ expenditures for education also increase with the number of
adult members with higher secondary education, the reason being partly that
after completion of higher secondary education, boys often continue their
education by joining the university or some specific field of training.
Households from Jhapa district pay out more on education than their Sunsari
counterparts because Jhapa lacks good institutions for higher education, and,
therefore, households need to send their family members to nearby cities or to
the capital for advanced studies. The asset index is positively related with the
amount a household spends on education; the same applies to households
belonging to the fifth income quintile54.

Expenditures on health
Our results show that remittances exert a significantly positive influence on
health expenditures. As expected, expenditures on health care increase with
the number of household members above 60 years of age, as older persons
usually are more affected by sicknesses and infirmities than other age groups.
Households belonging to the “Newar”, the “Hill Janajati” or the “Terai
Janajati” ethnicity tend to spend less on healthcare than their reference group,
“Brahman/Chhetri”. Among the asset variables, “land holding” and “asset
index” are significantly positive related to health expenditures, while the
“semi-permanent housing structure” is negatively associated with health
expenditures, as households endowed with higher physical capital are able to
spend more on health care.

54
Against our expectations, the size of the landholding did not play any major role in
educational expenditures; hence, its square was dropped from the model.
 102

6 Conclusions
The use of remittances from overseas has become a focal point of the ongoing
development debate among researchers, policy makers, and governments. By
examining the relationship between remittances and expenditures, this study
has shed light on how these transfers influences the consumption patterns of
the households. The likelihood of receiving remittances is essentially
determined by households’ individual characteristics, physical capital, and
location. The descriptive results show that 37% of all sample households and
95% of the migrants’ households in our study area had received remittances.
Having a higher number of males between 15 and 60 years in the household,
being from Hill Janajati ethnicity, having an extended family, and having a
house with a semi-permanent structure are increasing the household’s
likelihood of receiving remittances.
Our results demonstrate that remittances sent back by the migrants provide
financial support for day-to-day survival in terms of food availability and
healthcare. The outcome with regard to human capital development is
ambitious: On the one hand, they are not associated with educational
expenditures and hence do not seem to play a decisive role; on the other hand,
they support health expenditures and thus the healthiness and physical fitness
of the household members. The question why remittances do not lead to
higher educational expenditures, which would be important for the long-term
livelihood security, in particular of low-income families, would be an
important case for future research.
Our study considered the household expenditures pattern for only one year.
So, migrants’ households were found to enjoy improved material standards of
living in terms of better housing quality, which might also have been the
result of earlier remittances receipts. Exploring the use of remittances for
several years would provide deeper insights into the impact of remittances at
the household and community level. In order to do so, extensive research on
 103

the use of remittances seems essential, and further investigations in this area
are needed, in particular with regard to the relationship between remittances
and educational progress.

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 106

Annex

Fig. A1: Map of Jhapa district indicating sampled municipality and

VDCs

Chin

Jhap
Indi

Source: Univ. of Kathmandu, Topographical Department, 1997

 107

Fig. A2: Map of Sunsari district indicating sampled municipality and

VDCs

Chin

Sunsar

Indi

Source: University of Kathmandu, Topographical Department, 1997

 108

Table A1: Variables for determinants of remittances receipt

Variables Description
Dependent Variable: Remittances 1 if HH receives remittances, 0 otherwise

Independent Variables
Household characteristics
Age (X1) Age of the hh head in years
Age square (X2) Age square of hh head
Sex of hh head (X3) 1 if head is female, 0 otherwise
Young dependents (X4) Number of dependents aged 0-4 years
Other dependents (X5) Number of dependents aged 5-14 and 60+ years
Young women (X6) Number of female aged 15-29 years
Adult women (X7) Number of female aged 30-60 years
Young men (X8) Number of male aged 15-29 years
Adult men (X9) Number of male aged 30-60 years
Occupation of household head
Farming + 1 if head engaged in agriculture, 0 otherwise
Business (X10) 1 if head engaged in business, 0 otherwise
Services (X11) 1 if head engaged in services, 0 otherwise
Wage earner (X12) 1 if head engaged as wage earner, 0 otherwise
Others (X13) 1 if head engaged as other, 0 otherwise
Unemployed (X14) 1 if head unemployed, 0 otherwise
Ethnicity/caste group
Brahman/Chhetri + 1 if Brahman/Chhetri, 0 otherwise
Newar (X15) 1 if Newar, 0 otherwise
Hill Janajati (X16) 1 if Hill Janajati, 0 otherwise
Terai Janajati (X17) 1 if Terai Janajati, 0 otherwise
Hill/Terai Dalit (X18) 1 if Hill/Terai Dalit, 0 otherwise
Family structure
Nuclear family + 1 if nuclear family, 0 otherwise
Extended family (X19) 1 if extended family, 0 otherwise
Human capital
Education of head (X20) Schooling of head in years
Education square (X21) Square of schooling
Adult with higher education (X22) Number of adults with higher education
Physical capital
Physical capital
Landholding (X23) Landholding size in hectare
Landholding square (X24) Square of landholding
Asset index(X25) Average of number of household durable goods (scale from 0-16)
Household debt (X26) 1 if household is indebted, 0 otherwise
Housing structure
Permanent structure + 1 if permanent structure, 0 otherwise
Semi-permanent structure (X27) 1 if semi-permanent structure, 0 otherwise
Temporary structure (X28) 1 if temporary structure, 0 otherwise
Other structure (X29) 1 if others, 0 otherwise
Area
District (X30) 1 if Jhapa, 0 otherwise
Rural (X31) if rural, 0 otherwise
+ reference group
 109

Table A2: Variables for food, education and health expenditures

Variables Description
Outcome variables
Food expenditure (Y1) Household’s annual expenditure on food (NRs.)
Educational expenditure (Y2) Household’s annual expenditure on education (NRs.)
Healthcare expenditure (Y3) Household’s annual expenditure on health care
(NRs.)
Independent Variables
Remittances (X1) 1 if hh received remittances, 0 otherwise
Household characteristics
Age (X2) Age of the hh in years
Sex of head (X3) 1 if household head is female, 0 otherwise
Young dependents (X4) Number of dependents aged 0-4 years
Other dependents (X5) Number of dependents aged 5-14 and 60+ years
Young women (X6) Number of female aged 15-29 years
Young men (X7) Number of male aged 15-29 years
Adult women(X8) Number of female aged 30-60 years
Adult men (X9) Number of male aged 30-60 years
Employment sector of head
Farming+ 1 if head engaged in agriculture, 0 otherwise
Non-agriculture (X10) 1 if head engaged in non-agriculture, 0 otherwise
Unemployed (X11) 1 if head unemployed, 0 otherwise
Ethnicity/caste group
Brahman/Chhetri+ 1 if Brahman/Chhetri, 0 otherwise
Newar (X12) 1 if Newar, 0 otherwise
Hill Janajati (X13) 1 if Hill Janajati, 0 otherwise
Terai Janajati(X14) 1 if Terai Janajati, 0 otherwise
Hill/Terai Dalit(X15) 1 if Hill/Terai Dalit, 0 otherwise
Family structure
Nuclear family+ 1 if nuclear family, 0 otherwise
Extended family (X16) 1 if extended family, 0 otherwise
Human capital
Education of head (X17) Schooling of household head in years
Adult with higher education (X18) Number of adults with higher education
Physical capital
Landholding(X19) Landholding size in hectare
Landholding square (X20) Square of landholding
Asset index (X21) Average of number of household durable goods
(scale from 0-16)
Household debt (X22) 1 if household is indebted, 0 otherwise
Housing structure
Permanent+ 1 if permanent structure, 0 otherwise
Semi-permanent (X23) 1 if semi-permanent structure, 0 otherwise
Temporary (X24) 1 if temporary structure, 0 otherwise
Other (X25) 1 if others, 0 otherwise
Income quintile
Quintile 1+ 1 if household belongs to 1st quintile, 0 otherwise
Quintile 2(X26) 1 if household belongs to 2nd quintile, 0 otherwise
Quintile 3(X27) 1 if household belongs to 3rd quintile, 0 otherwise
 110

Variables Description
Quintile 4(X28) 1 if household belongs to 4th quintile, 0 otherwise
Quintile 5(X29) 1 if household belongs to 5th quintile, 0 otherwise
Region
Location/Area
District (X30) 1 if Jhapa, 0 otherwise
Rural (X31) if rural, 0 otherwise
+ reference group
 111

Table A3: Summary of descriptive statistics in Eastern region

Migrant Non-migrant Overall HH
N=212 N=330 N=542
Variables Mean SD Mean SD Mean SD
Migration .39 .488

Household characteristics
Age of HH head (years) 44.48 13.83 46.49 10.25 45.70 11.81
Age square of head 2228.0 1140.6
2168.50 1320.44 2266.36 1008.72
8 5
Sex of head .50 .50 .95 .22 .77 .42
Household size 5.18 1.77 5.01 1.46 5.08 1.59
Dependents 1.48 1.22 1.41 1.21 1.44 1.21
Children below below 5
.28 .52 .23 .47 .25 .49
yrs.
Children below 5-14 yrs. .88 .88 .85 .93 .86 .91
Members 15-29 yrs. 1.56 1.30 1.52 1.19 1.53 1.24
Members 30-60 yrs 2.07 .83 2.05 .78 2.06 .80
Members above 60 yrs .35 .63 .34 .62 .35 .63
Education of HH head
5.68 5.1 7.63 5.50 6.87 5.44
(yrs)

Occupation of household head

Farming/Agriculture .35 .48 .32 .47 .33 .47
Teaching/Service .10 .31 .27 .44 .20 .40
Trade/business .17 .38 .23 .42 .21 .41
Wage earner .03 .17 .09 .29 .07 .25
Others .03 .17 .05 .21 .04 .19
Unemployed .31 .46 .05 .21 .15 .36
Ethnicity/caste group
Brahmin/Chhetri .52 .51 .61 .49 .57 .50
Newar .10 .30 .06 .24 .08 .27
Hill Janajati .28 .45 .18 .39 .22 .42
Terai Janajati .05 .22 .08 .28 .07 .26
Hill/Terai Dalit
.05 .21 .07 .25 .06 .24
Family structure
Nuclear family .73 .44 .76 .43 .75 .43
Joint family
.27 .44 .24 .43 .25 .43
Social capital
Family’s international
.31 .46 .03 .16 .14 .35
migration experience
Family’s internal
migration experience .76 .43 .70 .46 .72 .45

Physical capital
Land holding (ha) .51 .74 .54 .75 .53 .74
Landholding square .80 2.9 .85 2.46 .83 2.64
 112

Housing structure
Permanent .32 .47 .32 .47 .32 .47
Semi-permanent .28 .45 .22 .42 .25 .43
Temporary .36 .48 .40 .49 .38 .49
Others .04 .20 .06 .24 .06 .23

Loan taken .51 .50 .55 .50 .54 .50

Income Quintile
1 .39 .489 .09 .284 .21 .41
2 .24 .43 .16 .37 .19 .37
3 .19 .40 .21 .41 .20 .40
4 .09 .29 .27 .44 .20 .40
5 .08 .27 .27 .45 .20 .39
Urban .54 .50 .50 .50 .52 .50
 113

Remittances and long-term livelihood security in the

Mountains of Nepal55
Karishma Wasti

1. Introduction

Worldwide, numerous studies have considered the impact of migrants’

remittances on poverty reduction and livelihood security, from the micro-
household level up to the macro-national level. For example, Adams and Page
(2005) in their investigation on 71 countries56 arrived at the result that a 10%
increase in per capita remittances from international migration reduces the
number of people living in poverty by 3.5%. Numerous studies focusing on
the micro-level and working with household level primary data found that
remittances contribute to poverty reduction, strengthen the access to goods
covering basic needs, and hence support livelihood security (see, e.g., Yang,
2004; Adams et al., 2008; Le Goff, 2010; Ratha, 2013).
Specific studies on Nepal point into a similar direction. The effectiveness of
remittances to reduce poverty in Nepal was demonstrated by Lokshin et al.
(2007) and Bhadra (2007) by using data from national surveys, like the Nepal
Living Standard Survey (NLSS), as well as other household surveys. They
also have been shown to significantly contribute to the achievement of the
Millennium Development Goals (MDG), particularly with regard to poverty
reduction to 21% by 2015, down from 38% in 2000 (GoN/NPC, 2016). The
sustainability of these achievements remains to be demonstrated yet. In order

55
This paper is based on a thesis submitted by the author in partial fulfillment of the
requirements for the degree of Master of Science in Regional and Rural Development
Planning, Asian Institute of Technology, Thailand funded by the Ministry of Foreign
Affairs, Norway.
56
The authors used data from IMF (International Monetary Fund), the World Bank, and
OECD (Organization for Economic Co-operation and Development).
 114

to assess the longer term welfare effects of remittances, it is equally important

to consider how these transfers are being used and – for further policy
interventions - what influences the purpose of their use. While national-level
figures reflect that remittances contribute to overall poverty reduction in the
country, the amounts migrant-sending households actually receive might fail
to significantly strengthen their financial, social and human capital, and thus
their long-standing basis for livelihood security. In fact, it has been observed
that families with a poor economic background are compelled to take (formal
or informal) loans to cover the migration expenses, implying a high risk of
slipping into lasting indebtedness (Seddon, Gurung & Adhikari, 1998).
Moreover, increased consumption expenditures financed by incoming
remittances in a supply restricted environment may cause inflation in local
markets, which is the more pronounced the more non-tradeable products are
bought (Knerr, 1998). Hence, returned migrants whose families neither
dispose over interest-yielding assets, nor did invest their remittances into
profitable businesses tend to migrate repeatedly, as they usually do not find a
job at home. These circumstances result in permanent cycles of out-migration
for uncountable workers.
Although short-term economic benefits of remittances are widely emphasized,
in the longer term, out-migration and remittances have a high probability to
adversely affect the economic development of the migrants’ country of origin,
depending on the amount and use of remittances. The present study sheds
light on this aspect by focusing on the amount, use and determinants of
received remittances in poor households of mountainous areas in Nepal, based
on primary data about remittances and migrants’ and their households’ socio-
economic characteristics collected through a survey among rural households.
It is a relevant input for policies targeting the amount and productive use of
remittances, pointing to the need for policies which integrate remittances into
the economy in a way which benefits the nation’s long term development.
 115

The findings of the study are useful for identifying potential for improvement
and for shaping corresponding measures.
Section (2) will explain the methodology used, including a description of the
study area and the data base; section (3) will present the results of the
descriptive analysis, and section (4) those of the regression analysis referring
to the determinants of remittances. Section (5) will concludes and offer policy
recommendations.

2 Methodology and data base

2.1 Profile of the research area

The survey took place in the Village Development Committees (VDCs)

Bocha and Lakuri Danda in the District of Dolakha57 in Central Nepal, east of
Kathmandu and bordering with China. In the 2011census, it counted a total
population of 186,557 in 46,688 households on an area of 2,191 km2
(GoN/CBS, 2016). The literacy rate was 51.1% and the primary occupation
for 65% of the total economically active population (above 10 years) was
agriculture. 50% of the households had landholdings ranging from four to ten
Ropanis58, 30% had less than four, 16% 10 to 20, and just 4% had more than
20 Ropanis, i.e. one hectare; one percent were landless (NHRC, 2012).
Dolakha has a rugged terrain with high mountains, an agriculture-dependent
population and a high rate of out-migration. According to the census of 20011
2001, it had 186,557 inhabitants while in 2011 it were 204,229 (CBS, 2015),
i.e. in spite of Nepal’s generally positive population growth of 1.3% in 201459

57
Altogether, Nepal has 75 districts.
58
“Ropani” is Nepal’s customary unit of land measurement. One Ropani corresponds to
0.05 hectare.
59
In 1994 Nepal’s population growth had been 2.6% (World Bank, 2016).
 116

(World Bank, 2016), the district’s population has declined, indicating a poor
economic situation which drives out-migration.
Bocha as well as Lakuri Danda have limited access to basic services and
resources. They were selected for the study because of their particularly high
rates of international out-migration, with the highest number of international
migrants in the district, according to the records of passport applications
available from the District Administration Office60.

2.2 Sampling
To find the respondent households, we used a combination of purposive and
snowball sampling. These wards were chosen for the research through
purposive sampling, whereby documentation by the VDC offices provided
guidance to the wards61 with a maximum number of households with
international labour migrants. Out of each VDC, one ward was chosen.
During focus group discussions conducted in the wards, three household
categories were identified for the survey: those receiving remittances from
abroad; those not receiving remittances; and those with migrants’ spouses
settled in the capital Kathmandu receiving remittances62. Due to a lack of
official records on individual foreign employment at the district or VDC level
remittances receiving households had to be identified by snowball sampling,
i.e. initially, one single recipient household in each selected ward in both the
VDCs was chosen, and from the information collected from these households,

60
The exact number of international out-migration cannot be indicated. The VDC profiles
listed 320 for Bocha and 225 for Lakuri Danda, however, during her interaction with the
residents the researcher found the number was more than double. Hence, it seemed
inaccurate to make statements about the total number.
61
A ward is a local authority area, typically used for administrative and electoral purposes.
62
Most of the rural Nepalese families are joint families. The spouse, in these cases, was
found to be living in Kathmandu, but the parents and other family members had remained
in the village. So, although the remittances initially arrived at the villages, it was not
spent there by the parents of the sender, but rather by the spouse in the capital.
 117

the next respondent households that were likely to be receiving remittances

were identified. The 120 respondents were either the household heads, if they
received remittances, or else another family member receiving them.

2.3 Data Analysis

For identifying the significant variables, a bivariate, two-tailed correlation
analysis was carried out, with the amount of remittances received as the
dependent variable and the migrants’ individual characteristics, destination
and occupation, as well as the socioeconomic characteristics of their
households as the independent variables. In a second step, the use of
remittances for the item categories on which the highest amounts were spent
was correlated with the variables representing the migrants’, the households’
and the spending persons’ characteristics.
The nature and degree of influences of various factors affecting the amount
and use of remittances was explained by using quantitative statistical analysis
was used to explain. In addition, in-depth case studies and interviews
highlight the different motivations and reasons behind the actors’ decisions to
further support the findings gained from the quantitative analysis.

3 Migrants’ personal characteristics, destinations, and remittances:

descriptive analysis

3.1 Migrants’ personal characteristics

Table 1 shows the personal characteristics of the migrants included in the
sample. The majority of them were unskilled labourers in Middle Eastern and
South East Asian countries; 53% worked on construction sites, in mines, or in
manufacture industries in Qatar and Malaysia. 38% of the unskilled were
household workers, mostly employed in Lebanon.
77% of the 128 migrants were men; their average age was 30 years. The
majority worked abroad for about 2.5 years and on average earned around
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NPR 22,00063 per month. Female migrants had an average age of 28 years,
and their average earnings were less than NPR 20,000 per month. Half of the
male migrants worked in the Middle East and 16% in South East Asian
countries, while all females were employed in the Middle East, almost 40% of
them in Lebanon. 42% of the migrants had secondary level education and
12% even higher; however, about 30% of the migrants had not undergone any
formal education at all. Half of those 19% who had received some kind of
training before migrating were qualified as vehicle drivers.
The migration costs included airfare, commission to the recruiting agencies
and to the manpower exporting companies, taxes, and other petty
expenditures. The average cost of migration was NPR 130,000 per migrant;
but it varied considerably depending on the destination and the nature of the
aspired job (see Table 2), tending to increase with the skill level of the
occupation and hence also with the expected income of the migrants.
The fees stipulated by the Nepalese Government under the Foreign
Employment Promotion Board, targeting temporary labour migrants, include
a predetermined commission to the manpower companies the level of which
depends on the destinations, independently of the migrant’s skill level.
Actually, charging higher amounts is common among employment agents.
The extent of irregularities can be assessed by comparing the costs stipulated
by the government with those actually paid by the migrants from the surveyed
households. In some cases, the actual costs paid were almost twice the amount
set officially for those countries (see Table 3). For the majority of those going
to Israel, where an estimated half most of the Nepali workers have an illegal
status, the fees usually were ten times higher than the amount allotted by the
government (Center for the Study of Labour and Mobility, 2017; cit from The
Himalayan Times, 2012).

63
NPR 100 corresponds to US$ 0.92 (January 2016).
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Table 1: Migrants’ personal characteristics

Characteristics details Age group of migrant (years)
<20 20-40 > 40 Total
Total migrants (%) 4 91 5 100
No 4 72 4 80
Trainings received
Yes 0 19 1 20
None 0 20 1 21
Primary1) 1 23 2 26
Education
Secondary 3 36 3 42
Higher sec.and more 0 11 0 11
South Asia 1 4 1 6
SE Asia 2 17 1 19
Destination East Asia 0 3 0 3
Middle East 2 66 3 71
Europe 0 1 0 1
<2 yrs. 3 27 2 32
Duration of stay 2-4 yrs. 1 56 3 59
>4 yrs. 0 8 1 9
Unskilled2) 4 53 3 60
Occupation Semi-skilled 0 32 2 33
Skilled 0 7 0 7
<20,000 3 63 3 70
Salary 20,000-40,000 1 19 0 20
>40,000 0 8 2 10

1) “Primary level” is education up to class five in school; “secondary level” class eight to
ten; and “higher secondary or more” class eleven or higher. “None” refers to no formal
education.
2) “Unskilled work” refers to manual labour without particular skills (like domestic helper,
construction worker, cleaner etc.); “semi-skilled work” refers to competencies in the use of
simple tools and machines with sufficient knowledge (like driving, cooking and catering);
“skilled work” refers to the possession of specific knowledge on operation of special
equipment and machineries (like heavy machineries in hospitals, accounting and
technicians)
Source: Author’s field survey
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Table 2: Cost of migration according to migrants’ skill level

Average amount
(NPR)1) Unskilled Semi-skilled Skilled

Cost of migration 122,000 153,000 150,000

Salary per month 18,000 24,000 34,000

1) 100 NPR=0.93 US$ in 12/2015; 100 NPR=0.96 in 12/2014
Source: Author’s field survey

Table 3: Stipulated costs and incurred average costs of migration (NPR)1)

Country Government stipulated cost Actual cost incurred Difference
Malaysia 80,000 118,000 38,000
Middle East 70,000 121,000 51,000
Israel 131,000 433,000 302,000
Japan 50,000 100,000 50,000
Poland 80,400 230,000 149,600
1) 100 NPR=0.93 US$ in 12/2015; 100 NPR=0.96 in 12/2014
Source: Foreign Employment Promotion Board, 2012 and author’s field survey

3.2 Amounts and determinants of remittances

The surveyed households received considerable amounts of remittances from
19 different countries at time intervals of three months to one year, varying
from NPR 11,000 to NPR 600,000 p.a. The highest average amount came
from South Korea, with more than NPR 300,000, followed by Iraq with about
NPR 270,000, while the lowest came from India, Oman, and Lebanon, with
around NPR 50,000 (see Fig. 1).
The total amount of remittances received from a particular host country tends
to be determined first of all by the difference between the per-capita income
in the sending and the receiving countries. Although almost 80% of Nepal’s
international migrants are in India, money transfers from the Gulf countries,
 121

like Qatar and Saudi Arabia, make up the largest share of remittances in the
country.

Fig. 1: Average remittances p.a., by migrants’ destination (NPR p.a.1))

1) 100 NPR=0.93 US$ in 12/2015; 100 NPR=0.96 in 12/2014

Source: Author’s field survey

To identify the major factors influencing the amount of remittances sent, three
aspects were analysed: personal characteristics of the migrant, personal and
socioeconomic characteristics of the receiver, and socioeconomic
characteristics of the households. The variables with sufficiently strong
correlation coefficients (i.e. with a significance level of <0.05) are shown in
Table 4.
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Table 4: Factors influencing the amount of remittances

Dependent variable: remittances p.a., in NPR
Variables Unit Remittances per year
Migrants’ salary NPR .629**
Number of migrants Number .249**
Destination is SE Asia Dummy, 0=no, -.203*
1=yes,
Destination is East Asia Dummy, 0=no. 1=yes .193*
Cost of migration NPR .236**
**) Correlation is significant at the 0.01 level (2-tailed).
*) Correlation is significant at the 0.05 level (2-tailed).

Source: Author’s calculations

Migrants’salaries. The variables “migrants’ salary” and “remittances per

year” are correlated by a coefficient of 0.63, with a significance of p<0.01, i.e.
the migrant’s salary had a strong influence on the amount of remittances. In
general, higher salaries are not necessarily associated with higher amounts of
remittances. In the surveyed households where remittances were the major
source of income, however, they increased with the migrants’ salaries. These
salaries were strongly determined by the migrants’ occupation: almost 60% of
those earning more than NPR 20,000 per month were engaged as semi-skilled
and skilled employees, most of them working as supervisors in non-
agricultural sectors, as mechanics and army officials. The migrants’ salary is
also closely related to the destination region it was highest for those working
in East Asia (NPR 43,000) and South Asia (NPR 35,000), while it was lowest
in the Middle East and South East Asia, where the vast majority (90%) of the
migrants was employed. In Afghanistan, the migrants are paid higher wages
because of a lack of domestic work force due to war. As put forward by the
World Bank (2011), in Middle East countries, like Qatar, the Government of
Nepal is responsible for the low wages due to deficient bilateral negotiations
 123

and because it has left the control over the whole employment process to
manpower sending agencies in Nepal. The migrants, therefore, are heavily
exploited both in terms of salary and of working conditions. Training received
is also a decisive factor for the migrants’ salary. For example, language
courses, vehicle driving lessons, and hospitality training may enable them to
earn almost twice as much as before. The 12% of the migrants with above
secondary-level education on average earned almost NPR 30,000 per month.
They were more informed about the available choices, salaries, and the risks
involved in the migration process, and as a result earned and also remitted
more.

Number of migrants. The correlation between the variables “number of

migrants in the household” and “remittances received per year” was 0.25,
with a significance of p<0.01. 6% of the surveyed households had two
remitting migrants; on average, they received about NPR 260,000 p.a., but
these higher amounts had no substantial impact on the households’
expenditure patterns. Households with two migrants had to service twice the
loans taken to cover the migration costs.

Costs of migration. The migration costs, which include commission for the
employment agency, expenditures for obtaining a passport, airfare, and
others, had a significant influence on the amount of remittances sent home. In
particular the employment agency strongly affected the costs of migration: the
higher the expected salary and associated profits, the higher were the charged
commission fees, and later on after the migrant had started with his/her job,
the amount of remittances sent. Afghanistan, South Korea, and Israel yielded
higher amounts of remittances than the other countries considered, but at the
same time the costs of migrating to these destinations were higher. India and
Malaysia, on the other hand, generated the lowest amount of remittances p.a.
 124

but also implied low transaction costs of migration. In almost all cases, the
costs of migration were covered by personal loans incurred by the migrants’
households for which an average interest rate of 36% p.a. was paid64. These
high migration costs enforced high remittances to pay off the debts as soon as
possible. For the majority of the destinations, just for that purpose, in the first
year, the migrant had to remit 50% of his/her annual income. To save more
money for remitting, Nepali migrant workers have been reported to be living
in exceedingly poor and crowded accommodations and working hard under
harsh climatic conditions resulting in to wide-spread health problems
(Adhikari, 2009).

Destination: Table 4 shows a negative relationship between the dummy

variable “destination is South East Asia” and “remittances per year”. 22 of the
23 migrants employed in this region were in Malaysia, sending less than NPR
100,000 p.a. More than 80% of them worked as unskilled labourers in the
manufacturing industries and on construction sites, earning around NPR
14,000 per month, which was the lowest figure among all destinations.
The relationship between “destination is East Asia” (Japan and South Korea)
and “remittances per year”, in contrast, was positive with a coefficient of
0.193 and a significance of p<0.05. Only 3% of the sampled migrants were
employed in this region, yet, earning an average of around NPR 45,000 per
month - which was among the highest of all regions - and remitting more than
NPR 250,000 p.a., although they worked mostly in unskilled jobs, and just a
few in semi-skilled (vehicle driver) jobs. South Korea was the destination
which generated the highest incomes which definitely has boosted up the
amount of remittances received from there.

64
The inflation rate in Nepal was around 9% in 2014, i.e. the real interest rate is 27%.
 125

3.3 Use of remittances

The expenditure patterns of the surveyed households are broadly classified
into five major categories: loan repayment, daily consumption, investments,
savings (bank and home), and community development. As compared to loan
repayment and consumption, only negligible shares of remittances went into
investments or savings (see Table 5), although with increasing remittances,
the households spent lower shares on consumption and higher ones on
investments. These findings are coherent with those of Adams and Cuecuecha
(2010), Khan (2008), and others, who found that household investments
increase with the amount of remittances received.

Loan repayment
91% of the surveyed households had taken loans to cover the initial migration
costs. More than 90% of these loans were borrowed from local businessmen
and relatives at a nominal interest rate of around 36%65. Such lending required
no collaterals. Because of mounting interest payments and social pressure, the
debtors felt urged to pay the loans back as fast as possible. Hence, loan
repayment used up the highest share of remittances, and was prioritized in all
four household categories. Accordingly, the amount paid back increased with
the amount of remittances received. As a consequence, the households with
pending loans were also found to spend lower shares of remittances on other
categories like education, social activities, food, and health.

65
In the year of the survey, the inflation rate was 9.6%, hence the real interest rate was about 26%.
(World Bank, 2017).
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Table 5: Use of remittances in different household categories

Expenditure category2)
Con- Com-
Household Expenditure Loan sump- Invest- Sa- munity
1)
Categories details repayment tion ment vings devel. Total
Very low average, 24,703 9,677 3,981 0 235 38,596
remittance NPR/hh (64) (25) (10.3) (0) (0.6) (100)
(n=17) % of hh 83 53 59 0 12

Low average, 39,245 21,651 17,180 1,651 0 79,727

remittance NPR/hh (49) (27) (18.9) (2.1) (0) (100)
(n=42) % of hh 93 86 86 12 0

Moderate average, 73,129 37,932 27,932 862 291 140,145

remittance NPR/hh (52) (27) (19.9) (0.6) (0.2) (100)
(n=42) % of hh 90 90 90 7) 10

High average 135,056 60,683 133,618 8,700 42 338,099

remittance NPR/hh (40) (17) (39.5) (2.6) (0.01) (100)
(n=19) % of hh 90 74 90 16 5
1) The four categories defined are (in NPR p.a.): very low remittances (≤ 50,000), low
remittances (50,100-100,000), moderate remittances (100,100-200,000) and high
remittances (> 200,000)
2) Share of per capita expenditures in brackets

Source: Author’s field survey

Usually, depending on the amount of the loan and of the remittances received,
it took the households one to two years to amortize it. In some cases, when
the remittances were low and/or the annual loan repayments and interest
obligations had been exceptionally high, they even needed more than three
years. The majority of the migrants had work contracts for about three years,
and most of the working time was used for earning money to pay back the
loans. As a result, less was left for investments and thus for long-term
livelihood support. Without investments, however, the only alternative of
 127

income generation for these households was repeated migration. These

circumstances put particularly strong pressure on unskilled migrants with low
salaries.

Consumption
Consumption categories on which remittances were spent included basic
needs (food, clothing and healthcare), social events (festivals and cultural
ceremonies), and purchase of assets with a long-term positive influence on the
household’s welfare but not generating revenues (durable goods and
vehicles).
Basic Needs. 79% of the households spent on average NPR 20,000 p.a. on
basic needs, whereby those earning less than NPR 50,000 p.a. spent the
lowest, and those receiving more than NPR 200,000 the highest amounts on
food, clothing, and healthcare. In all household groups, the highest shares
were expended on food and clothing, and the lowest shares were allocated to
health, of which a large share was spent on the treatment of serious ailments
or for surgical operations. Food was the second major category of remittances
spending after loan repayment. Both the absolute amount as well as the share
spent on it increased with received remittances, due to the inclusion of more
high-protein items in the diet, namely milk and meat.
Social activities and entertainment: The expenditures on social activities and
entertainment included festivals celebrated regularly the year around
(Dashain66 and Tihar67 for the Hindus and Lohsar68 for the Tamangs); singular
and occasional ceremonies like marriages; different recreational activities;

66
Dashain is a festival of worshiping goddess Durga and celebrating for fifteen days.
67
Tihar is celebrated immediately after Dashain for five days, worshiping goddess Laxmi,
holy animals and brothers by sisters.
68
Lohsar is a festival of New Year celebrated by the Kiratis.
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pilgrimage; and joint consumption of liquor and tobacco69. 69% of the

households reported to have spent part of the remittances on festivals and
ceremonies. On average, households spent NPR 8,600 on annual festivals and
about NPR 10,400 for other ceremonies. The expenditure share spent on these
categories declined with increasing remittances, indicating that in the given
social context they were not luxury spending70.
Purchase of assets. Although with increasing remittances the proportion of
households purchasing assets as well as the amounts spent on that category
gradually increased, these shares overall were insignificant. The items
purchased were mainly mobile phones, television sets, watches, and furniture.
Half of them were purchased abroad as gifts and brought home by the
migrants. 28% of the households who had spent remittances on buying assets
had purchased mobile phones and 16% television sets from the transfers.

Investment
Expenditures on items expected to yield some economic return or to
prospectively increase in value, thus ultimately supporting future
consumption, were grouped under “investment”. They comprise annual
expenditures on physical as well as human capital, including education and
training; agriculture and livestock; gold; real estate; lending out credits;
savings deposits; cottage industry and small businesses; money lent out on
interest; and community development projects.
Education and Training. Of the 99 households spending money on education,
70% had already paid off their debts, and more than 90% also spent
significant amounts on basic needs and social activities. They were receiving
an average of NPR 158,000 p.a. as remittances, which is considerably more

69
These were part of the celebrations and were reported to be consumed only during the
festivals, however, not only by the households, but also as offerings during parties etc.
70
This is measured by the economic definition of luxury goods as those displaying an
income elasticity of demand of more than one (Mankiv, 2011).
 129

than the overall average of the surveyed households. All of them had school
children. On average, they disbursed NPR 11,500 p.a. on their children’s
education in private schools, which was half of the amount spent on basic
needs. 6% of these households also spent around NPR 1,000 p.a. on basic
computer courses for their school children. There were no instances of
remittances used for vocational or short professional trainings.
Agriculture and livestock: Almost all of the surveyed households were
involved in some form of agriculture and/or livestock keeping. Nevertheless,
only 17% had invested remittances for such purposes, and in addition the
share spent on that decreased with increasing remittances received.. The
major investments undertaken in that context were on fertilizers (36%), tools,
and improved seed varieties for staple crops and commercial vegetable
farming (40%). Expenditures on livestock were mostly for cattle, goats, and
poultry feed (72%), and on shelter constructions (21%).
Gold. 12% of the surveyed households had purchased gold, whereby the share
of remittances spent on it increased with the amount of remittances received.
On average, the households that had bought gold used 9.6% of their annual
remittances and 40% of their assets expenditures for that purpose.
House and land. 13% of the households had invested in house construction;
they all had received remittances between NPR 50,000 and NPR 100,000 p.a..
Among the households receiving remittances of more than NPR 200,000 p.a.,
75% of had purchased land.
Lending out credits. Among the surveyed households, 13% reported to have
lent out part of their received remittances to local people at an average interest
rate of around 36% without collateral. The amounts advanced increased with
the sum of remittances received. Most of the households which had given out
such credits had received remittances of NPR 155,000 p.a. or more.
Savings deposits. 40% of the households reported to have bank accounts
and/or cash deposits at their own or some relative’s home. Bank deposits
 130

dominated; only a few were holding cash deposits. Households from all
remittances receiving groups had savings bank accounts, yielding an interest
rate of 7-8%; the amounts deposited increased with the amount of remittances
received. Some households deposited a share of their remittances in the bank
and withdrew just the interests for household use.
Cottage industry and small businesses: Only one single household reported
having spent some remittances in the cottage industry; it had purchased a
sewing machine to start a tailoring shop. 3% of the households had
established small shops for groceries and other items of everyday use, and one
household had spent remittances to expand his already existing store.
Evidently, the households’ investments in business and cottage industry
depended on the occupation, skills and experiences of their members. Almost
50% of the households investing remittances into business had operated them
already before migration, and they used part of the remittances for expanding
their stores or re-opening former ones.
Lack of sufficient funds, skills, and market knowledge required to start a new
venture were put forward as the prime reasons for refraining from spending
money on cottage industries or businesses. Since remittances were among
their most important sources of cash income, the households spent a major
proportion of them on loan payments and consumptions. This left them with
comparatively small amounts for investment. Moreover, gold and bank
deposits were considered as saver assets which also applied for those
households that did not have any loans to repay.

Community development activities

In rural communities of Nepal, households use to participate in community
development projects like roads, schools, or irrigation canal construction by
contributing cash, goods, or labour. However, only 7% of the respondent
households contributed remittances to such services, irrespective of the
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amount received. The contributions made were in partnership with the VDC
and external donors.

4. Determinants of the use of remittances

This section looks into the factors determining the use of remittances,
referring to the three major spending categories identified in our survey: i)
loan repayment, ii) consumption (basic needs and social expenditures), and
iii) investment.
A literature review shows that the use of remittances varies with the socio-
economic characteristics of households, the amount of remittances, the
household’s wealth status and resources, the household size, and the migrant’s
personal characteristics (Adhikari, 2009; Adams et al., 2008; Osili, 2007).

4.1 Factors influencing loan repayment

To avoid interferences due to variations in the amount of remittances, the
expenditures have been entered as a percentage share of the annual
remittances. The detailed results of the correlation analysis with respect to
loan repayment are shown in Table 6, which displays the significant
outcomes71. The correlation of “expenditures on loan repayment”, with
“expenditures on investments”, “expenditures on basic needs” and
“expenditures on social activities” were highly significant and negative. The
correlation between with the dummy variable “loan remaining” was
significantly positive, as households spent the largest part of their remittances
on paying back their loans until these are fully amortized, as explained above.
The expenditures on loan repayment are negatively related with the size of
households’ landholdings, which can be explained by the fact that richer
households do not have accumulated so many loans and also may not depend

71
Coefficients which are significant at p<0.05 are not presented.
 132

on remittances for paying off their debts. Households with landholdings of ten
Ropanis or more on average spent only 16% for loan repayment; 87% of them
had already paid off the total loan amount at the time of the interview.
The receiver being the migrant’s wife is negatively related with “expenditures
on loan repayment” meaning that, if a husband migrates and the wife takes
charge of the expenditures, she tends to spend the received remittances more
on the basic needs food, health, and education than left-behind husbands. This
result corresponds to Guzman et al.’s findings that female-headed households
tend to spend more on health and education than male-headed ones (Guzman
et al., 2007). Accordingly, expenditures on food were particularly high when
the remittances-receiving person was female, i.e. the migrant’s mother or
wife. On average, they spent around NPR 17,000 p.a. on food which is almost
twice the amount spent by their male counterparts. More than 90% of the
female receivers also spent money on health and clothing, although
comparatively small amounts. In addition, the migrants’ wives were more
inclined towards investing in gold, which would eventually reduce the share
spent on loan payment.

Table 6: Factors influencing loan repayment

Correlation
Variables Unit
coefficients
Expenditures on basic needs NPR -0.497**
Expenditures on social activities NPR -0.241**
Expenditures on investments NPR -0.668**
Loan Remaining (Dummy) Dummy(no=0, yes=1) 0.0462**
Landholdings Ropani -0.200*
Receiver is migrant’s wife (Dummy) Dummy (no=0, yes=1) -0.182*
**) significant at 0.01 level (2-tailed); *) significant at 0.05 level (2-tailed).

Source: Author’s calculations

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4.2 Factors influencing consumption

Consumption out of remittances is essentially related to basic needs and social
activities. Table 7 shows the significant correlation coefficients for both
categories.

Basic Needs. “Expenditures on basic needs” are negatively correlated with

those on loan repayment and with remaining loans, i.e. those households that
still had pending loans spent less on basic needs. The relationship between the
remitter and the person spending the remittances also influenced the share
spent on basic needs. While the correlation of “expenditures on basic needs”
with “receiver is migrant’s father” was negative, that with “receiver is
migrant’s brother” was positive. Experience demonstrates that the elderly in
the rural areas, who are mostly illiterate, and less confident about handling a
large sum of cash, spent the money more cautiously than younger men. In-
depth interviews with migrants’ parents revealed that they preferred to deposit
the remittances in the bank for future financial security than to spend them on
consumption and/or investments which appeared more risky to them. The
young male recipients, in contrast, more knowledgeable and sometimes
employed, spent the remittances more on food (especially meat and dairy
items), clothing, and small investments.

Social activities. “Expenditures on loan repayment” is negatively related to

“expenditures on social activities”, as well as “expenditures on basic needs”,
since there was a direct competition between both spending categories, as for
most of these households, remittances were the only or at least the major
source of cash income. It is positively related to “receiver is the migrant’s
husband”, i.e. the migrant is female in which case a higher percentage tends to
be spent on festivals and cultural ceremonies. In fact, the in-depth interviews
 134

indicated that female household members were taking the household’s

essential needs more into account, while male members were more careless in
that respect, spending a larger share on social gatherings and festivals at the
expense of daily requirements.

Table 7: Factors influencing the use of remittances for consumption,

correlation coefficients

Variables Exp. basic needs Exp. social activities

Expenditures on loan repayment (NRP) -.497** -.241**
Loan remaining (Dummy) -.207* -0.173
Receiver is migrant’s father (Dummy) -.192* -0.099
Receiver is migrant’s brother (Dummy) .197* 0.04
Receiver is migrant’s husband (Dummy) 0.047 .256**
**. Significant at 0.01 level (2-tailed); *; significant at 0.05 level (2-tailed).
Source: Author’s calculations

4.3 Factors influencing investment

The significant correlation coefficients with regard to investment are
displayed in Table 8. Total investments are negatively correlated with
“expenditures on loan repayment”, as these are competing spending
categories. In fact, the greatest hindrance to investments expressed by
households was the obligation to pay back the loans. This relationship was
further substantiated by the strong negative correlation between “investments”
and “loan remaining”. As explained above, households making high
investments (into education, gold, bank deposits, land, and housing) were
those that had already paid off their loans.
The share of remittances used for investment increased with the amount of
remittances received, mainly because households that receive higher
remittances paid back the loans within a shorter period of time and hence had
more money left for investments.
 135

The variable “secondary occupation”, indicating the household’s other

income sources, covered three additional income groups represented by
dummy variables: income from agriculture (0); income from unskilled labour
(1); and income from professional jobs or businesses (2). The overall negative
correlation coefficient indicates that when households dispose over a reliable
secondary source of income, they tend to invest less. Households with
members having alternative occupations earned higher incomes, and those
with members occupied in public services moreover were entitled to
additional fringe benefits and pensions. Hence, these latter households felt
less pressure to invest their remittances for securing their future livelihoods,
while those depending more on agriculture and unskilled labour tend to invest
more as their major income sources were more risk-prone, seasonal, and
generally yielding lower returns. In particular incomes from subsistence
agriculture using traditional technologies in fragmented landholdings are
unreliable and insufficient to secure a family’s livelihood. Such households
also spent a higher share of the received remittances on agriculture, mainly to
buy fertilizers and seeds for paddy and vegetables.
According to our survey results female remittance receivers’ households
usually invested more than those of male receivers, with the major categories
being gold and children’s education, although the correlation obtained was
weak. Investment in gold was preferred, essentially because in rural
households, it is used as collateral for loans, is easy to sell, and also is a
symbol of higher social status in the Nepalese society, predominantly among
women. In 90% of the households where remittances spent on gold, and in
almost 75% of those expending remittances on education, the receivers were
females.
Expenditures on education were closely related to the share spent on basic
needs. 99% of the households using their remittances to buy food, health care,
and clothing also spent them on invested in children’s education, whereby the
 136

amounts varied with the remittances received and with the availability of
further sources of income: those households with stable secondary income
spent generously - some even all of their remittances - on education, as their
other household needs were covered by alternative sources of money.

Table 8: Factors influencing investment out of remittances

Variable Unit Correlation coefficient

Expenditure on loan repayment NPR -0.668**

Secondary occupation Dummy -0.250**
Loan remaining Dummy -0.323**
Annual remittances NPR 0.317**
**. Significant at the 0.01 level (2-tailed); *.significant at the 0.05 level (2-tailed).
Source: Author’s calculations

5 Conclusions and recommendation

The findings of our survey and additional in-depth interviews with migrants’
families have demonstrated that although remittances are essentially intended
to secure the households’ livelihood and as safety nets to cope with future
economic hazards and unreliable income sources, quite large shares are spent
on repaying loans taken to cover the migration costs. The remaining amounts
are mostly too small for financing major investments. This conforms to earlier
observations in Nepal by Endo & Afram (2011), who emphasize that major
proportions of the remittances received by rural households are given away
for servicing the debts incurred to pay for the transaction costs of migration,
and hence only minor shares were channelled into investments. This
emphasizes that under the given circumstances, remittances may not be
considered as a sustainable basis for improving the migrants’ material quality
of life.
 137

The findings also reveal that an ill-monitored and poorly managed migration
process has imposed unreasonably high migration costs. The majority of the
migrants accept even dangerous and low paid occupations with substandard
working conditions since they have to pay back such loans at home, borrowed
at high interest rates. They are not in a position to take the risk of bargaining
for a better job or higher payments since they need to send back money
regularly to get rid of the loan burden and therefore cannot risk conflicts with
their employers.
The majority of the women, even those with higher education, take up jobs as
domestic helpers which usually imply jeopardies and low salaries. Capacity
development for skill enhancement to meet the service demands of the local
market in host countries could help these women to attain better jobs72.
For both male and female, subsidizing training and bringing it closer to the
districts where the prospective migrants are living would make it more
affordable and thus be a promising strategy for poverty reduction, taking into
account the economically fragile situation of marginalized groups.
Capacity building without the support of a strong legal system cannot ensure
the migrants’ human and professional rights, yet. But although Nepal’s
Foreign Employment Act (FEA) of 2007 pinpoints the government’s
commitment to protect the migrants’ rights, to care for their capacity
development, and to offer compensations for frauds and losses of lives or
health, our results highlight major shortcomings in the implementation of the
government’s law intended to protect migrant workers abroad. Among the
major causes for the exploitation of Nepalese migrants in the destination
countries is the lack of negotiation activities by the government of Nepal with
regard to the terms and conditions under which migrants are working, and
often suffering (Endo & Afram, 2011). For some countries Nepal is a major

72
For the specific situation of Nepalese female migrants see, for example, Badhra (2007).
 138

supplier of unskilled labour, and the government would need to stand up for
the protection of its nationals by negotiating with the labour receiving
countries. So, one of the initial steps towards enhancing the flow and
improving the use of remittances should be to enforce an effective legal
system, as well as bilateral agreements, including decent work conditions,
with the major destination countries. Also, the Nepalese government still has
to ratify the major International Conventions on Migration and Rights of
Migrant Workers initiated by the UN and ILO (Office of the United Nations
High Commissioner for Human Rights, 2005) and to encourage trade union
coordination referring to the rights of migrant workers. This would also foster
Nepalese migrants’ social, economic, and cultural equivalency in the foreign
country; control irregular migration; and combat injustice at the international
level.
Lack of proper registration criteria for manpower agencies is another major
neglect of the government in the process of monitoring and controlling the
migration process (see Amnesty International, 2011a). An efficient system to
grade (based on the performance), evaluate, and, in case of incompliance,
penalize those companies is urgently needed. To optimize the process and the
outcome of labour migration and remittances for the families involved on the
ground, the government is bound to actively intervene by covering the entire
migration chain, from the approval of employers and recruiting agencies, over
capacity building of the workers, up to addressing the gaps between
requirements and actual competences with regard to human and financial
resources which are necessary to efficiently monitor the process. All this
should be done with a focus on enhancing the benefits for the migrants and
their families and the overriding principle of safeguarding human rights, prior,
after and to the most possible extent during migration73.

73
Since the mid-2000’s, the Nepalese government has introduced a number of measures to
improve the situation for the migrants (see MoEL, 2014), including the inauguration of its
 139

An effort with regard to strengthening the competences of migrant workers

was made with the compulsory orientation training to departing migrant
workers under the FEA 2007. However, as demonstrated by Amnesty
International (2011b), either it did not reach the (prospective) migrants due to
lack of financial resources: was too short (one hour per day for two days); or
lacked useful content. Also, problems of fraud occurred, and there is a need
to supress the scams related to these trainings and to make them more
accessible and useful for the migrants. In addition, in order to make
remittances a really useful contribution to longer-term livelihood security, it is
necessary to discuss income and remittances management as well as
investment issues during such trainings. The migrants’ attention should be
drawn towards possible small scale investments they could finance out of
remittances in order to support their income after the remittances have ceased,
and towards the benefits of productive and profitable investments, beyond
bank deposits, land, and gold. Basically, they should be equipped with
competences to assess investment opportunities that fit their own personal and
family situation. On that basis, before going abroad, the migrants, together
with their families should develop ideas about the use of future remittances.
Therefore, these trainings would have to be scheduled quite early so that the
migrants have sufficient time to contemplate on and to adapt to the
circumstances they will be experiencing.
Central aspects of migration process management are the creation public
awareness towards the migrants’ and their families’ rights, setting effective

„Labour Village“, intended to consolidate the range of services for international migrants
under one roof; the establishment of a „Labour Desk“ for safe migration at the Tribhuvan
international airport in Kathmandu; the recruitment of labour attachés for embassies and
consular offices to provide assistance and care in case of need; and starting a process to
revise the curricula of the pre-departure orientation program with the aim of enhancing its
efficiency. The success of these measures is still debated.
 140

official limits for migration costs, and government support and/or

compensation in case of injuries or death, are.
Our research has revealed a strong impact of migration costs on other
household expenditure categories. Usually covered by a loan at high interest
rates, they turned out to be the biggest obstacle against investments to
improve the households’ long-term welfare. Hence, the introduction of a
suitable loan scheme accessible to economically fragile rural households
could help considerably to channel the money earned abroad to more
productive uses. For that purpose, it would be necessary to support public
loan schemes that already appeared as follow-ups in response to the 2007
FEA in order to enhance the access of poor migrants to financial funds.
Lessons can be learnt from similar schemes that have been successful in other
low-income countries like Indonesia, where saving banks like the Rakhyat
Bank Indonesia, under the guidelines of the Central Bank of Indonesia, lend
out the amount required to cover the migration costs to prospective migrants
under the umbrella of agreements with the employers and recruiting agencies
(Ferrari et al., 2006).
To expand the scope of migrants’ investments and to also foster the
development of larger-scale enterprises, the government should moreover
strengthen local co-operatives of migrants and their families. This could be
done particularly by supporting microfinance systems fed by remittances as
well as networks for generating, collecting, and jointly investing collective
savings of low-income households. They could be handed out as loans to
offer alternatives to the high-interest credits supplied by local businessmen.
This would imply the establishment of grass root level institutions, including
the strengthening of technical skills, abilities of fund generation, and
professional business management competences. For providing loans a
revolving fund fed by remittances could be generated, into which households
willing to save remittances could insert their excess capital, while those in
 141

need could access it. Further research is required yet to assess the migrants’
competences for that purpose and in that context the necessary training
requirements.

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 143

Measuring the Impact of Migration on Households’ Food

Security
Amina Maharjan, Siegfried Bauer and Beatrice Knerr

1. Introduction
Under unfavourable agricultural conditions, with small farm sizes, an adverse
natural environment and backward technologies, the strategies of Nepal’s
farm households to attain food security and livelihood improvements are
increasingly depending on non-farm income sources. Subject to growing
population pressure on limited land resources, farm households, in order to
remain or become food secure, have to increase either the productivity of their
agricultural resources or their off-farm income, or both. The changing
aspirations of young people and the exacerbating risks and uncertainties in
crop production ascribed to climate change further aggravate the farmers’
despairs. Under the given restrictions, smallholder families hardly have the
capacities to meet their increasing food requirements without commanding
over sufficient purchasing power to buy it from the market, but with a
stagnating domestic industrial sector the chances to find off-farm employment
near their places of residence are as well minor. Hence, those who are
assigned the role as breadwinners of the family have to travel to faraway
places in search for alternative sources of income to secure their and their
dependents’ basic necessities. In particular to attain food security, which is
the most elementary requirement, whole households or the most fit-to-work
members, are urged to move to urban and semi-urban areas and since the
early 2000’s increasingly abroad, beyond India which – sharing a largely
uncontrolled border with Nepal – has a long tradition as destination for low-
skilled Nepalese labour migrants.
 144

Nepal’s agro-ecological belts (Mountains, Hills, and the Tarai) and

development regions (Eastern, Central, Western, Mid-Western and Far-
Western region from East to West) differ considerably with regard to the
extent and direction of out-migration. From the Far-Western and Mid-
Western development regions people mostly migrate to India, as seasonal or
circular migrants, while from the Western, Central, and Eastern regions, they
move primarily to overseas destinations for periods of two to three years
(DoFE 2014). Going to India for work is comparatively cheap, but holds only
low-paid jobs while labour migration to overseas destinations implies high
returns but also high costs. Map 1 displays the regional distribution of
officially registered overseas migration in Nepal. It shows that the
overwhelming share of the registered international migrants come from the
Eastern part of the country.

Fig. 1: Regional distribution of institutional labour permits for overseas

migration

Source: DoFE, 2014

 145

As food security is closely related to the extent of poverty, remittances play a

key role in this context. They are considered an important factor in the
reduction of poverty in Nepal (Lokshin et al. 2007). Official remittances to
Nepal reached about US$ 5.8 billion in 2014, an increase by the more than
five-fold since 2000 (MoF, 2015). In 2014, they contributed 28% to the
country’s GDP (World Bank, 2015). In addition, significant amounts have
been transferred informally in particular by cross-border migrants from India.
Between FYs 1995/96 and 2010/11, the share of Nepalese households
receiving remittances increased from 23.4% to 55.8%, and the average
remittances per recipient household from NPRs 15,160 (US$ 280) to NPRs
80,436 (US$ 1,072) corresponding to 26.6%, respectively 40%, of the
receiving households’ average total income (CBS 2011). Most of these
transfers are spent on basic needs; to attain food security is a major objective.
According to the CBS survey, almost 80% of the remittances received are
used for daily household consumption, and 7% for repaying loans. Besides,
smaller amounts are spent on acquiring household property (5%), for
education (4%), capital formation (2%), and other purposes (3%) (CBS 2011).
However, these global figures hide major individual differences, and
measuring the impact in diverse migration contexts requires careful selection
of indicators and methodology. The objective of this paper is to carve out
these differences and to find how far remittances help different households to
cope with food insecurities. As an empirical data base, for this purpose we
collected primary data in two diverse regions of Nepal.
The paper is structured as follows: the next section (2) presents the applied
methodology and the data base used; section (3) definitions and indicators of
“food security”; section (4) causalities of households’ food security, resp.
food insecurities; and section (5) some conclusions and policy
recommendations.
 146

2 Methodology and data base

The empirical research for this study was conducted in the Mid-Hills of Nepal
which are characterized by a high rate of international out-migration. A
distinct feature of the region is its system of small-holder subsistence farming.
We selected two districts for our survey, applying the criteria “migration
intensity” and “dominant migration destinations”, distinguishing between,
India on the one hand and other countries on the other hand. So we arrived at
Baitadi in the Far-West region, with migrants moving mostly to India, and
Syangja in the Western region where the migrants’ major destinations are the
Gulf countries and Malaysia. Both vary significantly with regard to numerous
development indicators. Therefore, investigating the implications of labour
migration in these two districts promised to supply additional insights and
useful input to the ongoing debate about the role of remittances as a means to
enhance food security in Nepal.
For the purpose of our comparative research we collected primary data during
a household survey. From the two study districts, we selected eight Village
Development Committees (VDCs) based on the registered incidence of labour
out-migration. In each VDC, 10% of the households were selected for
interviews, taking care of their caste and their economic class. Using a multi-
stage sampling procedure, a total of 512 households was interviewed, of
which 509 could be retained for the analysis at the end. Although our survey
took place already in 2007, the collected data still possesses unreserved
relevance.

3 Definitions and indicators of food security

Food security, as emphasized in the FAO’s definition, has four major
components: food availability, access, utilization/consumption, and
vulnerability. The most commonly used definition is that food security “exists
when all people, at all times, have physical, social and economic access to
 147

sufficient, safe and nutritious food to meet their dietary needs and food
preferences for an active and healthy life.” (FAO, 1996) To discover the
effects of migration and remittances on households’ food security, which is
the main objective of our study, as a first essential step this paper examines
suitable indicators to measure availability, access and consumption.
In general, an indicator “is used to reflect an aspect of a given characteristic,
in this case some dimension or component of food security” (Leroy et al.,
2015). Numerous indicators have been developed to measure food security,
and Maxwell and Frankenberger (1992) have sub-divided them into the major
categories “process indicators”, reflecting food supply and access to food, and
“outcome indicators”, serving as proxies for food consumption.
For measuring the impact of migration on households’ food security in our
survey we selected four indicators, based on the criteria importance in the
Nepalese context, extent of primary data requirement, and extent of food
insecurity: households’ own perception of their food security situation;
dietary diversity; coping strategies applied during food shortage; and per
capita expenditures on food and non-food items. The data requirements thus
include a mixture of perceptions and facts. The details of the indicator
calculations are presented below.

Perception of households’ food security

We measured the households’ food security perception by asking the
respondents how many months their household could meet its food
requirements from its own production; how many months they could purchase
food from secure sources of income; and how many months the household
faced food insecurity if any. This method captures the present situation as
well as the vulnerability dimension (Barrett 2010). As it is comparatively
simple to detect and has been found to correctly reflect the household
situation, it is widely used by researchers as a yardstick for assessing
 148

households’ food security. The results of our survey are presented in Table 1.
They differ between the two districts, representing two quite diverse streams
of migration.
In Syangja, in general, secure income sources contribute more towards
households’ food requirement than own food production. Significant
differences in food security are observed between both household groups.
While non-migrant households depend more on own production migrant
households rely more on external income sources. Overall, the number of
food insecure months is higher among non-migrant households than among
migrant households. Just 5% of the migrant and 22% of the non-migrant
households expressed to have a food security problems.
In Baitadi, in both household groups, own production contributes more to
food security than secure income sources, with no significant difference
between migrant and non-migrant households. The migrant households faced
slightly fewer food insecure months (1.2 months) than non-migrant
households (1.5 months), but this difference was not significant. Altogether,
44% of the migrant and 48% of the non-migrant households declared to be
confronted with food insecurity over time.

Table 1: Households’ perception of food security from different sources,

in months
Migration status from own from external food insecure
District production income sources months
Non migrant 5.44 6.04 .52
Syangja Migrant 4.22 7.67 .09
T-test 2.965*** -4.246*** 3.874***
Non migrant 6.27 4.21 1.48
Baitadi Migrant 6.44 4.39 1.22
T-test -.414 -.552 1.180
Note: ***) significant at 1% level
Source: Authors’ data and calculations
 149

Coping strategies
In the next step we asked the respondents about the households’ coping
strategies to overcome the situations of food insecurity. 137 households had
perceived such periods, 37% of the non-migrant households and 20% of
migrant households, with significant differences in the number of food
insecure households between the two districts. We calculated coping strategy
scores according to the method used by Maxwell (1995) along the following
steps.
1ststep. The households are asked whether they had enough food from own
production and income for the entire next year (12 months). Those who
mentioned food insufficient months, were asked about the planned measures
of coping with food deficiencies, whereby five major strategies were listed
and the respondent was asked about the one he/she would use.
2ndstep. To reflect the severity of the food insecurity, each coping strategy
was allocated a score based on literature (FAO, 2004), expert consultation,
and own observations and experiences. The scores – shown in brackets -
were: eating non preferred food (1); eating less food (2); borrowing from
relatives and friends (3); skipping a few meals (4); borrowing money from
money lenders (5).
3rd step. The responses were multiplied by the respective scores and then
summed up for each household. The total score obtained by this indicates the
household’s weighted coping strategy score – the higher its value the higher is
the household’s degree of food insecurity.
The scores are slightly higher in Baitadi as compared to Syangja, but in both
the districts our results show no significant differences in the total scores
between the migrant and the non-migrant households (Table 2).
 150

Table 2: Coping strategy scores for food insecure households

District HH’s Mean N Std. Dev. T test
Non-migrant 6.07 27 2.921
Syangja .069
Migrant 6.00 9 2.345
Non-migrant 6.66 61 1.223
Baitadi .227
Migrant 6.60 45 1.286

Source: Authors’ data and calculations

Dietary diversity measure

The indicator “dietary diversity measure” quantifies the food security
situation and reflects the nutritional security (Keding et al. 2012; Bouis and
Hunt 1999: Hoddinott & Yohannes 2002; Steyn et al. 2006). To compare
migrant with non-migrant households, we calculated the weighted dietary
diversity scores for each household, adapting to a similar work by Swindale
and Ohri-Vachaspati (2005) through the following steps.
1ststep. The questionnaire contained question on various food/food groups
consumed with the frequencies regular, frequently, seldom, rarely, and never
which were then converted into numbers, shown in brackets: regular (4);
frequently (3); monthly (2); rarely (1); and never (0).
2ndstep. Each food/food group was given a weight to reflect its importance for
food security based on past studies (Gittelsohn et al., 1998), expert
consultations, and own field observations and experiences: flour, root crops,
and traditional vegetables (1); rice, oil, and spices (2); pulses, improved
vegetables, and milk (3); and fruits, egg, meat, and sweets (4).
3rdstep. For each household the frequency of the food consumed was
multiplied with the weights given to it, and the results were added up to arrive
at the weighted dietary diversity scores. The higher the dietary diversity score
the better is the quality of food intake and thus the household’s food security
situation.
 151

For both household groups, the dietary diversity scores are higher in Syangja
than in Baitadi. In Syangjaare migrant households show significantly higher
scores than non-migrant households, while in Baitadi the difference between
both household groups is not significant (see Table 3).

Table 3: Weighted dietary diversity scores for the households

District HH Migration Status Mean Std. Deviation T-test

Syangja Non-migrant 80.10 10.511

-3.029***
Migrant 83.98 10.321

Baitadi Non-migrant 70.99 4.954

.356
Migrant 70.72 6.509
Note: *** - significant at 1% level.
Source: Authors’ calculations

Based on the calculated weighted dietary diversity scores of the richest

quartile the households were further classified as follows.
1ststep. The households were ranked according to their total income including
the value of subsistence production, returns from the sale of agricultural
products, off-farm incomes and received remittances, and accordingly
classified into four quartiles: highest (1), medium (2), low (3), and lowest (4).
2ndstep. The minimum, average and maximum weighted dietary diversity
scores were calculated, whereby the households belonging to income quartile
(1) were selected as reference, Considering the minimum and average
weighted score as the cut-off points, the dietary diversity classes were
constructed, and the households were correspondingly classified into three
categories: <59: low dietary diversity; 59 – 80: medium dietary diversity;
>80: high dietary diversity.
The numerical outcome of the classification is presented in Table 4. In both
districts only few households belong to the low-diversity class 1. In Syangja,
 152

the majority of the non-migrant households belong to the medium-dietary

class, and most of the migrant households to the high-dietary class. In Baitadi,
in contrast, most of the migrant households pertain to the medium class.

Table 4: Household classification according to their dietary diversity

score
Diversity score
District HH Migration Status
Low Medium High

Syangja Non-migrant 1 66 41
Migrant 0 69 101

Baitadi Non-migrant 3 122 3

Migrant 4 95 2
Source: Authors’ data and calculations

Per capita expenditures

To calculate the per capita expenditures the sum of the respondents’ annual
household expenses for food, non-food items, education, health, festivities
and ceremonies, social work, and others was divided by the respective
household size. These were matched with the poverty line of NRs. 7,700 in
the year of the survey to assess the households’ food security situation. If the
per capita expenditures were higher, the respective household was considered
to be food secure.
Initially the per capita expenditures were calculated on the basis of the total
household size, i.e. including the migrant (see Table 5). The results show a
significant difference between both household groups: in Syangja, migrant
households per capita spent more on food than non-migrant households,
whereas the reverse applied to Baitadi. However, as migrants do not depend
on household production or income for their food consumption and remit only
after having met their own sustenance requirements we also calculated the
 153

households’ per capita expenditures excluding the migrant in order to obtain a

realistic picture about their food security.

Table 5: Households’ per capita expenditures (in NRs)

Per capita expenditures
Household
District including migrant excluding migrant
Migration status
Mean Std. Dev. Mean Std. Dev.
Non-migrant 13,923 6903 13,923 6,903
Migrant 16,090 10914 22,250 15,468
Syangja
T test -1.844** -6.152***
Total 15,254 19038
Non-migrant 4,444 3096 4,444 3,096
Migrant 3,784 2019 4,757 2,626
Baitadi
T test 1.945** -.810
Total 4,153 4,582
Note: *** - significant at 1; ** - significant at 5%
Source: Authors’ data and calculations

This brought the per capita expenditures up from an average of NRs 16,090 to
NRs 22,250 in Syangja. In Baitadi, when migrants were excluded, migrant
households were found to spend more on food as compared to non-migrant
households, in contrast to the calculation which included the migrants, with
per capita expenditures of NRs 4,757 in migrant households, and 4,444 in
non-migrant ones, but this result is statistically not significant.

4. Causalities of Household Food Security

The description of the households’ food security situation presented above
indicates considerable differences between migrant and non-migrant
households. However, these results fail to conclude with any degree of
certainty that these differences are to be attributed to the migration decisions
 154

taken by households. In order to establish causalities it is necessary to conduct

an adequate analysis. This will be done in the following section.

Analytical Approach
One of the major reasons why households send their members on labour
migration is to improve their food and livelihood situation (Ale, 2004).
Therefore, migration would be endogenous in an equation analysing the
relationship between migration and household food security, and any attempt
to analyse the impact of migration on food security without taking care of the
reverse causality between these two variables would imply erroneous
conclusions. To take care of this endogeneity issue we applied the two stage
least square estimator with Instrumental Variables (IVs). The choice of the
IVs which were expected to influence the migration decision, but not the
outcome variables was based on a literature review. A number of studies
(Rozelle et al., 1999; Taylor et al., 2003; Taylor and Lopez Feldman, 2007;
McCarthy et al., 2006) have used migration networks for that purpose.
Because, formed by family and community members, they have also been
reported to have a significant impact on migration decisions in Nepal
(Thieme, 2006) we selected them as IVs.
The households’ own perception of food adequacy was used as the dependent
variable. Migotto et al. (2005) report, that in the case of Nepal, subjective
food security is correlated with dietary diversity, both at the national level as
well as for rural and urban households separately. They emphasize that this
variable also indicates relative food security based on past situations and thus
indirectly captures dimensions of vulnerability. Suitable socio-economic
household attributes were used as independent variables.
 155

Results and Discussion

We tested for the instruments and the endogeneity problem in the data set,
followed by the econometric analysis. The heteroscedasticity test results are
shown in Table 6. The Pagan Hall test revealed that heteroscedasticity is a
problem in the estimated equation’s disturbance process, more in Syangja and
less in Baitadi. Therefore, we used the Hansen J test instead of the Sargan test
for checking the validity of the over-identifying restrictions. The resulting p-
values showed that the instruments used are valid. In addition, the Durbin-
Wu-Hausman test for endogeneity showed that migration is endogenous in
Syangja but not in Baitadi. Therefore, in the first case we applied the IV (2-
SLS) estimator, and in the second case the OLS estimator.

Table 6: Heteroscedasticity, identification and endogeneity tests

Pagan Hall test (P Hansen J test Durbin-Wu-Hausman
District
value) (P value) test (P value)
29.620
Syangja 0.2203 0.02307
(0.0053)
20.688
Baitadi 0.5774 0.59077
(0.0793)
Source: Authors’ data and calculations

Overall, the variable “migration” displays a negative impact on the number of

food insecure months in both districts (see Table 7). However, while for
Syangja the respective coefficient is highly significant, for Baitadi it is not.
One migrating household member reduces the household’s food insecurity by
0.528 months in Syangja which supports the results of the descriptive
analysis. The migration destination and the migration pattern provide similar
result.
 156

In Baitadi households on average receive NRs. 24,693 of remittances which is

quite moderate, even by Nepali standards, and it cannot be expected to have a
strong influence on a household’s food security. In Syangja, in contrast, our
results suggest that migration has significantly improved the food situation. In
Baitadi migration thus appears more as a survival strategy. Deducting the
migrant from the calculations of per capita expenditures, i.e. calculating the
outcome if one less mouth is to be fed from a household’s limited available
resources also indicates that migration is just a coping mechanism under
conditions of the extreme poverty in the origin areas.
In her study in Bajura and Bajhang Districts in the Far Western Region of
Nepal Thieme (2006) reports that migration has not dramatically improved
the households’ livelihood situation in that region, but she emphasizes the
importance of migration and remittances with regard to risk reduction for
whole families, and she also mentions significant transfers in kind by the
migrants, for example clothes, or treatment for sick family members. Shahi
(2005) reports that the remittances sent from India are principally used to
supplement the farm income for meeting basic requirements. These results
demonstrate that - particularly in poor regions like Baitadi -, the impact of
migration on households’ wellbeing needs careful consideration.
Also, other determinants of households’ food security differed distinctly
between the two districts. In Syangja, factors contributing to improve food
security are the holding of assets and higher education, while increasing
household size is reducing it. In Baitadi, higher education, land holding and
holding assets had a positive impact on households’ food security, while
belonging to a lower caste and past household indebtedness had a negative
one. Households belonging to lower castes were likely to face 0.506 more
food insecure months than those belonging to the higher one.
Our results suggest that in both districts migration has increased the food
security of the left-behind households. However the extent differed
 157

considerably, with the richer district Syangja experiencing significantly

stronger improvements than the poorer district Baitadi. As the study excludes
non-cash contributions from migration such as gifts of cloths or health care
products, these outcomes are to be interpreted with caution, however.
In both districts, the F-statistics and the corresponding P-values confirm the
goodness of fit of our model. In the case of Baitadi, where OLS was used, the
R2 value indicates that about 36% of the variation in the number of food
insecure months is explained by the included variables.
 158

Table 7: Factors influencing household food insecurity

Syangja Baitadi
Unit of IV (2SLS) OLS
Variables measurement
Coeff. Robust Z Coeff. Robust t
S. E. S. E.
Migrants number -.528*** .170 -3.10 -.062 .131 -0.47

Age of hh head years .002 .004 0.67 .002 .007 0.36

Caste Dummy .082 .088 0.93 .506* .283 1.79

Economically number .171** .079 2.16 -.060 .104 -0.58

active male

Economically number .121** .058 2.09 .080 .104 0.77

active female

Very young number .036 .060 0.60 -.058 .071 -0.81

dependents

Other dependents number .131*** .044 2.96 -.010 .068 -0.15

Adults with higher number -.088* .049 -1.80 -.199** .082 -2.43
education

Log of total ropani -.086 .062 -1.38 -.886*** .167 -5.31

agriculture land
Tot livestock tropical units .013 .050 0.26 .094 .084 1.12
holding

Log of value of -.104*** .025 -4.18 -.252*** .084 -3.01

asset holding

Past household NRs .009 .101 0.09 .872*** .163 5.34

indebtedness

Constant .365** .183 1.99 2.809*** .610 4.61

N 280 229
F statistic (P 34.94 (0.0000) 16.20 (0.0000)
value)
R square 0.3596
Note: ***) significant at 1%; **) at 5%; *) at 10%
Source: Authors’ data and calculations
 159

5. Conclusions and recommendations

Like in many rural farm households all over the world, in Nepal migration is a
wide-spread livelihood strategy applied to enhance their food security. Pre-
existing livelihood situations guide the migration streams, with members of
households from the poorer Far-Western region going to low paying informal
jobs in India, while those from better-off Western regions moving to the Gulf
countries and Malaysia. The specific impact on food security differs
according to the destinations’ distinct migration conditions, in particular
costs, returns, and duration of absence.
The results from our household survey show that, in the richer regions, in
general, food security is stronger among migrant than among non-migrant
households. However, migration significantly improved the food security
situation only in Syangja while in Baitadi no significant impact could be
established. The difference between migrant and non-migrants households is
considerably bigger among households in Syangja than in Baitadi where it is
also not significant. Yet, only when the migrants were excluded as part of the
households were the calculated per capita expenditures for food items higher
in the migrant households, although this outcome is statistically not
significant. These results indicate that migration is a survival strategy or a
coping mechanism in periods of food shortage in the poorer Baitadi District,
but in Syangja it rather appears to be a scheme for enhancing the overall
material living standard.
In general, migration improves the households’ food security by enhanced
purchasing power to buy more food, and/or more inputs for higher own
production. Remittances receiving households tend to rely more on markets
for securing adequate food consumption. However, when the transfers are
comparatively low, they have to concentrate more on own production for that
purpose. While in Syangja improvements in the food situation stemmed from
better consumption quality due to increased household income, in Baitadi it
 160

was due to both improved consumption as well as improved subsistence

production. For poor farm households in the Far-western region, securing the
household members’ food requirements remains a challenge in spite of the
received remittances. Also, as in our study of unskilled Nepalese labour
migration is temporary in nature, households use to adopt multiple livelihood
strategies for securing their food consumption. Nepal’s migration policy has
largely neglected this migration-food security linkage as well as the manifold
strategies undertaken in this context by the households. Still, this area needs
urgent attention from the Government as well as from national and
international organizations involved in Nepal’s development process. To
ensure that the country does not drop into a vicious cycle driven by
dependency on migration and remittances, policy attention towards promoting
a productive use of remittances is required for attaining sustainable food
security.

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 163

Impacts of labour migration and remittances on rural

poverty and income distribution
The case of Bishankhunarayan VDC
Sanjeeb Maharjan, Béatrice Knerr and Amina Maharjan

1 Introduction

With a gross national income (GNI) per capita of just US$ 730 in 2014
(World Bank, 2015), Nepal is considered as one of the poorest countries in
the world. Also the population’s welfare, as expressed by the Human
Development Index (HDI), is with just 0.55 quite low when compared in the
international context (rank 145 out of 187 states) (UNDP, 2014). Two-thirds
of the country’s labour force is employed in agriculture, but even for most
farming households, their self-produced food is insufficient for survival
(MoF, 2012). Therefore, they depend on off-farm income sources for their
livelihood security, but a lack of employment opportunities and low wages in
the country do not offer much hope for improvement. Under these conditions,
a growing part of the rural population adopts migration-cum-remittance
strategies as a way to escape from their bad living conditions.
In fact, abundant evidence demonstrates that international migrants’
remittances have improved the living standard of countless Nepalese families.
Different empirical studies, as for example by Lokshin et al. (2010), Thieme
and Wyss (2005), and Bhadra (2007), demonstrate positive impacts of labour
migration on poverty decline in the country. As a result, the considerable
reduction of the poverty rate from 42% in 1995/96 to 21% in 2010/11 has
been mainly attributed to the expanding inflow of remittances (CBS, 2005;
CBS, 2012a). Against that background, labour migration in Nepal is
perceived as a major way out of deprived economic household conditions.
 164

However, as highlighted by Kumar KC (2008), the relationships between

migration, remittances, and poverty are more complex than might appear at
first sight, and therefore “a consideration of migration dynamics needs to be
integrated in poverty reduction strategies in Nepal” (Kumar KC, 2008: 287).
In this context, two highly policy-relevant questions arise: How far and under
which conditions this general trend includes poverty reduction among the
most marginalized strata of the population? and What are implications of
migration and remittances for income distribution and relative poverty. Our
research addresses these issues by a comparative empirical study based on
primary data collected in Lalitpur District, specifically in Bishankhunarayan
VDC (Village Development Committee), which is characterized by a high
share of the population living below the poverty line, and at the same time by
a high rate of outbound labour migration.
The next section (2) explains the research design, including an introduction to
the research site, the survey concept, and details about the data collection and
the data processing. Section (3) presents and discusses the empirical results,
referring to the socio-economic situation of the sample households, including
personal characteristics of its members; household expenditures; poverty; and
inequality. We finish with a summary and conclusions in section (4).
 165

2 Research design

2.1 Research site

Lalitpur District is situated in the Central Development Region of Nepal,
occupying an area of 385 km2 at an altitude ranging from 457 to 2,831m a.s.l.,
which results in quite diverse intra-district climatic conditions (DDC, 2007).
In 2011, it had 468,132 inhabitants in 109,797 households, half of them living
in rural regions (CBS, 2012b). Its population grows at a rate of almost 4% p.a.
(CBS, 2012b). With regard to the level of overall development, infrastructure,
road density, bank accessibility, cooperative institutions, women’s
74
empowerment , and gender equality, Lalitpur is among the top five of
Nepal’s 75 districts, and in terms of poverty and deprivation, it ranks seventh
from above.
However, the situation of its agricultural sector is below the Nepalese
average, with the third smallest average size of farm plots in the country; its
per capita food production is at rank 33, according to 2003 DDC figures
(DDC, 2004). In addition, the district’s favourable average figures hide major
differences, in particular between urban and rural regions. Regarding the
ethnic makeup of the village, Chhetri people constitute the largest group, with
more than 50% of the households belonging to this caste. Brahmins, however,
an ethnic group that accounts for 12.2% of Nepal’s overall population, are
absent. (National Population and Housing Census, 2011, cit. in CBS, 2012a).
The major crops grown in the district are paddy, mainly produced by rain-fed
farming, maize, and wheat. Cattle and buffaloes are kept for dairy production,
while goats, sheep, chicken, and pigs are primarily raised for meat supply, and

74
The indicator's used for women empowerment are: share of females being literate, share
of females in non-agricultural occupations, share of elected females at district level, share
of females at primary school level, share of girls' enrollment in primary level, and share of
girls’ dropouts at primary level. This indicator is elaborated in the ICIMOD/SNV 1997
study.
 166

sheep also for wool. The livestock products are mostly for the household’s
own consumption or sold at local markets. Commercial livestock holding is
rare, except for poultry (DDC, 2014). The small farm sizes and the high
population density depress the district’s per capita food production as well as
the farming households’ economic situation. The farm size structure tends to
be further fragmented in the course of time, mainly because of high
population growth and expanding urbanization. In FY 2013/14, Lalitpur
District officially registered 2,537 international out-migrants, more than twice
as many as in FY 2008/09; 90% of them were male (MoLE, 2014).
We conducted our study in Bishankhunarayan VDC at the eastern part of
Lalitpur district, located about 11 km from the urban centre of Patan.
Bishankhunarayan is one of its least developed VDCs, primarily due to poor
infrastructure and a difficult topography. It possesses only a lower secondary
school so that students pursuing higher education have to move to nearby
VDCs or the urban centre of Patan. Deficient irrigation facilities depress
agricultural productivity, and a lack of blacktopped roads and adequate
transport services makes it difficult for villagers to market their harvest.
Bishankhunarayan VDC is administratively sub-divided into nine wards and
in 2009 consisted of 1,064 households (VDC, 2010).

2.2 Survey concept

Our research was conducted as a comparative analysis. The sampling unit was
the household since in the Nepalese context it acts as the basic entity of
decision making. This approach is in line with the theory of New Economics
of Labour Migration (NELM), according to which households follow a joint
migration-cum-remittance strategy to maximize common goals like risk
diversification or counter-balancing deficient capital markets (see Stark and
Bloom, 1985). Two groups, non-migrant (NM) households and migrant (M)
households, were interviewed in Bishankhunarayan VDC to see if
 167

international labour migration effectively improves the poverty situation of

rural households in absolute and relative terms, including the income
distribution. Migrant households were the test group, while non-migrant
households were treated as control group75.
Purposive sampling was applied for the selection of the district (based on
migration streams), of the VDC (based on the poverty rates), and of the wards
(based on migration intensity). The non-migrant households to be interviewed
were randomly selected from the complete list of households obtained from
the VDC, while the migrant households were randomly selected from the list
of households found by a personal ward survey, i.e. the researcher received
the complete households list from the VDC administration, and with that list
visited each ward to find out which households included at least one migrant.
Based on migrant intensity, Wards 1, 2, and 9 were selected for the survey in
Bishankhunarayan VDC. In addition, in order to gain a more comprehensive
impression of the VDC, Ward 6 was also included because of its remoteness
and geographical isolation from the other wards, and the salient poverty of its
population,
After the migrant and non-migrant households in each of the chosen wards
had been identified, the required respondent households were selected by
random sampling. A total of 84 households were interviewed, but only 77
could be retained for the analysis76. Details on the sample size are presented
in Table 1.

75
Our investigation was limited by the fact that we did not know about the situation of the
households before one of its members migrated. Therefore, no before-and-after analysis
was possible.
76
The rest of the questionnaires was incomplete an/or not coherent.
 168

Table 1: Migrant households and samples in Bishankhunarayan VDC

Ward Migrant HHs Interviewed HHs
Total HHs
No. Name No. % NM M Total
1 Tallo Bistachap 81 20 24 8 7 15
2 Kot Danda,
Mathillo 228 62 27.2 18 16 34
Bistachap
3 Dhobikhola 52 8 15.4 - - -
4 Patalechap I 61 6 9.8 - - -
5 Patalechap II 99 16 16.2 - - -
6 Chapakharka 100 16 16 6 8 14
7 Kaprechap 165 13 7.9 - - -
8 Mahadev danda 205 43 20.9 - - -
9 Rachantar 73 22 30.1 5 9 14
Total 1064 206 19.4 37 40 77
Sources: VDC (2010) and authors’ survey

2.3 Data collection and processing

For acquiring the primary data set, a cross sectional survey was conducted in
Bishankhunarayan VDC in 2012. In addition, a preliminary questionnaire was
prepared and tested in the field, and then finalized in due consideration of the
test respondents’ reactions. In addition, relevant secondary data were
collected from published reports and documents of different national and
international institutions, like the Central Bureau of Statistics (CBS), Nepal;
the Nepal Institute for Development Studies (NIDS); the Department of
Foreign Employment (DoFE), Nepal; the Ministry of Finance (MoF), Nepal;
the World Bank; and Bishankhunarayan VDC.
After completion of the survey, the filled questionnaires were checked for
data quality. In cases in which they were incomplete or inconsistent, the
respective households were re-interviewed. Altogether seven data sets
eventually had to be rejected. The final database of 77 households was
inserted into Excel sheets for further processing. The data entered in local
 169

measurement units were later on converted into standard international scales.

The data analysis was carried out through descriptive statistics with the help
of the software package SPSS. A descriptive analysis was established by
comparing the households’ socio-economic situation, agriculture and
livestock holding, expenditures composition, poverty indicators, the migrants’
personal characteristics, and the poverty rate. To analyse agriculture and
livestock holdings, and expenditures on basic needs related to poverty
indicators, we conducted an unpaired t-test with the statistical program
GraphPad Prism.

3 Results and discussion

3.1 Migrants’ personal characteristics and remittances

The mean age of the 47 migrants in our sample was 30.4 years, ranging from
18 to 50 years, with a standard deviation of 7.5. This result is similar to that of
Williams et al. (2010), who found a mean age of 32 years among the Nepalese
migrants in the Gulf countries. The majority of the migrants were male (89%)
and married (74%), suggesting that international labour migration is primarily
pursued for improving the family’s material living standard.
All migrants in our sample were literate; 28% had secondary education; 41%
had below and 31% higher than secondary level education. While abroad,
83% of the migrants were involved in unskilled or semi-skilled labour,
whereas just 17% had jobs that were somehow conforming to their higher
education. In these cases, migrants were employed as supervisors, cooks, and
as accountant at a restaurant, while highly qualified workers included, for
example, an established restaurant owner in Japan through whom a number of
additional family members migrated to that country.
 170

In accordance with the national trend, Malaysia and the Gulf nations were the
major host countries of our sampled migrants (28%, resp. 53%) (Table 2).
The surprisingly high number of migrants in Japan (11%) was due to a high
number of migrants from one single family.

Table 2: Migrants’ Destination Countries (% of migrants)

Country % Survey % total Nepalese*)

Malaysia 28 40.9
UAE 21 11.2
Oman 19 <2
Japan 11 <2
Saudi Arabia 7 22.9
Kuwait 4 2.1
Iraq 2 <2
Israel 2 <2
Korea 2 <2
Qatar 2 20.3
UK 2 <2
*) Average for FYs 2008/09 to 2013/14
Source: Authors’ survey; ILO and MoLE (2014).

The respondents reported that their motivations for migrating were to meet
investment targets (30%); to manage financial constraints for fulfilling certain
obligations, such as marriage of daughters, providing good education to
children in future, or assuring high-quality food to the family (21%);
unemployment (28%); to escape from low wage rates (10%); and other
reasons (11%), like lack of savings, attraction of higher living standards
abroad, and following cultural obligations.
The most important agents for facilitating the movement were manpower
agencies (73%), relatives already settled abroad (19%), and friends and
acquaintances, including brokers (i.e. unregistered agents working informally)
(4%). On the average, the respondents spent NRs. 101,280 (US$ 1,164) on the
migration process, ranging from NRs. 18,000 for going to the UAE up to
 171

NRs. 195,000 for Iraq. The average duration of absence was more than two
and a half years.
The majority of the households (45%) reported that they received foreign
remittances every month, which was assisted by transfer agents being
available throughout the country. The average monthly receipts were NRs.
18,846.50 (US$ 216) (Table 3), amounting to NRs. 226,158 p.a. In a similar
study implemented in Kathmandu Valley, Arter (2009) found that households
were obtaining NRs. 23,355 per month, i.e. NRs. 280,260 p.a.. Both results
are considerably higher than the national average of NRs. 80,436 p.a. reported
by the Nepal Living Standard Survey of 2010/11 (CBS, 2011)77. Hence, an
average migrant of our survey (working abroad over the average absence
period of two and a half years and sending the average monthly remittances)
would have been able to recover his/her investment costs of NRs. 101,280
within six months of employment abroad.

Table 3: Absence time (months) and monthly remittances (NRs.)

Variables Min Max Mean Std. Dev.
Absence time 2.5 120 31.22 24.23
Remittances 0 100,000 18,846 18,956

Source: Authors’ survey

77
The difference to Arter (2009) might be explained by the fact that he conducted his
survey in urban areas where people supposedly have more access to the labour markets of
high-income Western countries and thus receive higher incomes, while in our study village
people use to migrate to GCC countries and Malaysia. The national average might be
lower because it represents 75 districts from where people have limited access to global
labour markets and mostly move to GCC countries, Malaysia, and other lower-, resp. lower
middle-income countries.
 172

3.2 Socio-economic situation of the sample households

The male-to-female-ratio was - with 1.09 - higher in migrant than in non-
migrant households, where it was 0.91. The share of household members in
the economically active age of 15-60 years was 68.6% in non-migrant and
71% in migrant households.
In terms of ethnicity, Chhetri represented the highest proportion among the
labour migrants of our survey (with 50%), followed by Tamang with 27%.
Similarly, within the group of non-migrant households, Chhetri made up 54%,
while had Tamang a share of only 16%. The Hindu religion was predominant
in both household groups (89% in non-migrant and 92% in migrant
households), which both were well above the national average of 81% (CBS,
2012b).
As an indicator for the economic status of a household, we used the
construction type of its home. From very poor to very rich, the order of the
house type is “flat galvanized iron sheet roof (GI)” – “pitched tiles” –
“pitched galvanized iron sheet roof (GI)” – “modern composite” – “modern”.
Concluding from the greater share of flat GI and pitched tiled homes, non-
migrant households belonged more often to the poorer stratum of the village
population (Table 4). Among the migrant households, in contrast, the share of
pitched GI and modern houses was higher, demonstrating their higher
economic status. This is reflected in the %-migrant-to-%non-migrant
relationship (%M/NM): it increased from 0.63 in flat GI to 1.25 in modern
houses.
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Table 4: House types of migrants and non-migrants households

Non-migrant Migrant
House type % M/NM
F % F %
Flat GI 6 16 4 10 0.63
Pitched tiles 6 16 4 10 0.63
Pitched GI 16 44 21 52 1.18
Modern composite 3 8 3 8 1.00
Modern 6 16 8 20 1.25
Total 37 100 40 100 1.00
Source: Authors’ survey

The share of households involved in agriculture was slightly higher among

migrant (52%) than among non-migrant households (49%). At the same time,
migrant households were significantly better off in terms of land tenure; 90%
of them cultivated their own land, but just 78% of the non-migrant households
did so, implying a %-M/NM ratio of 1.25, which is almost the fourfold of
those farming only rented-in land (0.31) (Table 5). None of the migrant, but
8% of the non-migrant households were landless.
Still, almost all farming households were characterized by a dominance of
subsistence production. The landless households relied entirely on
agricultural wage labour for securing their livelihood.

Table 5: Households’ land tenure system

Non-migrant HHs Migrant HHs
Type of land % M/NM
F % F %
Only own 29 78.4 36 90.0 1.15
Own and rented in 2 5.4 3 7.5 1.39
Only rented in 3 8.1 1 2.5 0.31
Landless 3 8.1 0 0.0 0.00
Total 37 100 40 100 1.00

Source: Authors’ survey

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Regarding the average size of landholdings, crop production, and livestock

keeping, no striking differences between the non-migrant and the migrant
households were observed.
The migrant households (with an average of 5.5 members) were slightly less
food self-sufficient than the non-migrant households (with an average of 5.2
members on). While they declared that their available food is sufficient for
nearly 5.0 months, non-migrant households stated it is enough for 5.3 months.

3.3 Household income and expenditures

Income differences
Household incomes comprise three major categories: farm income, off-farm
income, and remittances. We found no significant difference in farm income
between both household groups. The mean of the migrant households’ off-
farm income, however, is significantly below that of the migrant households,
with an M/NM ratio of 0.53, i.e. that of migrant amounts to only half of the
non-migrant households (Table 6). A major reason for labour migration might
be to compensate for low off-farm income. Yet, at the same time, the loss of
productive labour force implied by this may entail a further reduction of the
households’ off-farm income, thus aggravating the dependence on
remittances. After including remittances, the income difference between both
household groups is considerable, with a 2.24 M/NM ratio; i.e. in migrants’
households, it amounts to more than the double, demonstrating that
international labour migration is an effective way to enhance the low and risk-
prone income of rural households.
 175

Table 6: Sources of monthly household incomes

Non migrant HHs Migrant HHs
Income (NRs) Mean M/NM
Mean SEM* Mean SEM
Farm income 1,551 285.6 1,736 360.3 1.12
Off-farm income 9,984 832.0 5,253 744.1 0.53
Total income (incl. 11,530 815.1 25,810 3,214.0 2.24
remittances)
*) Standard error of the mean
Source: Authors’ survey and calculations

The major sources of farm income include goat rearing, vegetable and dairy
production, floriculture, selling livestock (calves, cows, buffalos, and
poultry), and lending out oxen for land ploughing and insemination. In
vegetable and dairy production, the mean is higher in non-migrant than in
migrant households (although not significantly), while for goat rearing and
other farm income components, it is the reverse (see Table 7).
Off-farm income, as the sum of paid employment, profits from small
enterprises (mostly poultry farms, local wine production, and small tea shops
with grocery stores), pensions, and daily wage labour, is significantly higher –
by NRs 4,731 – in non-migrant than in migrant households; this also applies
to its single sub-categories “revenues from small enterprise” and “wage
labour”. For some households (mainly those with retired professionals from
civil services, the Indian or the Nepali army, and the Nepali police), pensions
are an important source of income. Altogether, the non-migrants households’
main source of income is off-farm income, whereas for the migrants’
households, it is remittances.
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Table 7: Differences between non-migrant and migrant households’

monthly incomes, by components

Mean 95 % Confidence
Income component difference Interval t p-value
(NRs) Lower Upper
Goat rearing -204.4 -401.0 -7.835 2.07 0.042*
Vegetable production 1.2 -158.2 160.6 0.01 0.988
Dairy production 228.7 -471.2 928.6 0.65 0.516
Other farm income -211.2 -652.2 229.8 0.95 0.342
Total farm income -185.5 -1112.0 741.3 0.39 0.691
Salary 1,466.0 -1,014.0 3,947.0 1.18 0.242
Small enterprises 1,882.0 398.2 3,365.0 2.53 0.013*
Pension 48.65 -1,252.0 1,350.0 0.07 0.941
Wage labour 1,334.0 5,11.4 2,157.0 3.24 0.002**
Total off-farm income 4,731.0 2,511.0 6,952.0 4,251 0.000***
Total income
-14,280.0 -21,130.0 -7,425.0 4.157 0.000***
(incl. remittances)
Note: * - weakly significant; ** - significant; *** - highly significant
Source: Authors’ calculations

Differences in expenditures and poverty indicators

We tested the differences between both household groups with regard to their
major expenditures on items considered as essential indicators for
households’ abilities to cover their basic needs, namely food, education,
health, and shelter, as suggested as basic standards for measuring poverty by
Nepal’s Central Bureau for Statistics (GoN, CBS, 2012b)78.
Although the mean total expenditures on all spending categories are higher in
the migrants’ households than in the non-migrants’ households, these
differences are not significant with regard to the tested indicators for

78
Running expenditures on shelter were left out in our test because all household were living in their
own house.
 177

measuring poverty (Table 8). Only after subtracting the expenditures for basic
needs from the total income a highly significant difference of NRs. 12,430
between both groups shows up. This suggests that they spent quite similar
amounts on basic needs, i.e. both are largely able to cover their basic needs,
and what is left makes up the difference in the living standards79.

Table 8: Mean differences in expenditure (NM-HHs minus M-HHs)

Mean 95 % Confidence
Expenditure variable Interval
differences t p value
(monthly) Lower Upper
(NRs.)
Education -424.0 -1.155 307.4 1.157 0.251
Food -1,202 -2,788 383.5 1.512 0.135
Clothes -184.2 -389.6 21.19 1.789 0.077
Health -89.47 -329.6 150.7 0.743 0.459
Others (incl. savings and -12,430 -18,010 -6,858 4.450 0.000***
investment)
Note: *** - highly significant
Source: Authors’ calculations

In order to get an impression of the households’ living standards beyond the

satisfaction of the basic needs, we compared the percentage share of these
categories in the households’ total expenditures. The results show that the
share of income spent on food is significantly lower in migrant than in non-
migrant households (29.4% versus. 55.5 %; see Table 9). As the share of
expenditures on food tends to decrease with increasing household incomes -

79
While questions about the expenditures on education, food, clothes and health were
readily answered, questions regarding savings were usually considered as offensive by the
respondents. Therefore, difference between total income and the given four expenditure
categories referring to basic needs were categorized as “others”, including the amount
available for savings and investment.
 178

according to the widely substantiated Engel’s Law80 (Engel, 1857, cited.

from Timmer et al., 1983) -, this confirms that poverty is more prevalent in
non-migrant as compared to migrant households.

Table 9: Monthly expenditures on basic needs, and their share in total

income

Non-migrant HHs Migrant HHs N/NM

Expenditure
category Mean % of Mean % of
Mean % of total
(NRs.) total (NRs.) total
Education 03.51 15.6 2,227.50 8.6 1.24 0.55
Food 6,405.41 55.5 7,607.50 29.4 1.19 0.53
Clothes 648.33 5.6 832.55 3.2 1.28 0.57
Health 416.43 3.6 505.9 1.9 1.22 0.53
Others 2,261.08 19.6 14,692.7 56.9 6.50 2.90
8
Total 100 25,810.4 100
11,534.76
5 (US$
(US$ 133)
296)
Source: Authors’ calculations

3.4 Poverty and inequality

A. Poverty
For analysing the incidence and intensity of poverty in migrant and non-
migrant households in more detail, we calculated different poverty measures.
Based on the Nepalese per capita poverty line of NRs. 20,86081 (US$ 240)
p.a. for the fiscal year 2012/13, corresponding to NRs. 1,738 (US$ 20) per
month, we arrived at the following results (see also Table 10).

80
For empirical evidence see also OSCE (2001). For country comparisons see UNCTD
(2009).
81
According to CBS Nepal, the per capita poverty line for Nepal was NRs. 19,261 p.a. in
2010/11 prices. We raised this amount by the FY 2011/12 inflation rate of 8.3% (Nepal
Rastra Bank, cit. from The Arthik Abhiyan, 2012) and thus arrived at the 2012/13 poverty
line of NR 20,860.
 179

The poverty head count ratio, indicating the proportion of a population

classified as poor, is 28.27% among non-migrant and 10.45% among migrant
households (Table 10). If migrants are excluded from the household size (as
they are mostly absent), this level is further reduced in per-capita-terms for
migrant households.
In addition, for measuring the intensity of poverty, we calculated the total
poverty gap82 and the average poverty gap83. It is an improvement over the
poverty headcount ratio as it estimates the depth of poverty by considering
how far the poor are away from that poverty line. The total poverty gap in
non-migrant households was NRs. 21,297 per month, whereas it was just
around a fourth of that amount, namely NRs. 5,345 per month, in migrant
households. Likewise, the average poverty gap reached NRs. 394 per month
in the non-migrant and NRs. 232 per month in the migrant group. Similarly,
the Normalized Poverty Gap (NPG), showing how much income is relatively
missing per poor person to reach the poverty line, gives 22.7% for non-
migrant households and 13.4% for migrant households.
We also calculated the poverty gap index, defined as the average poverty gap
in the population as a proportion of the poverty line, as another measure of the
intensity of poverty. It can take a value from 0 to 1, whereby 0 signifies that
all the poor people lie exactly at the poverty line, and 1 indicates that all of
them have zero income. Both our households groups are close zero, but
migrant households are closer to it than non-migrant households.
We also used the squared poverty gap index (also known as poverty severity
index) to measures the severity of poverty among the poor. It is calculated by
averaging the square of the poverty gap ratio, i.e. it puts proportionally more
weight on the percentage the further a person's observed income falls below
82
The total poverty gap is the monetary sum of the shortfall of the total population from
the poverty line.
83
The average poverty gap is the monetary per-capita shortfall from the poverty line.
 180

the poverty line. Our result demonstrates that poverty is less severe in migrant
than in non-migrant households.

Table 10: Poverty in Bishankhunarayan VDC households

Poverty measures Non-migrant HHs Migrant HHs M/NM
Head Count Ratio (%) 28.27 10.45 0.37
Total Poverty Gap (NRs.) 21,297 5,345 0.25
Average Poverty Gap 394.39 232.39 0.59
Normalized Poverty Gap (%) 22.7 13.4 0.59
Poverty Gap Index (PGI) 0.064 0.014 0.22
2
Squ. Poverty Gap Index (PGI ) 0.021 0.003 0.47
Source: Authors’ calculations

B. Inequality
We measured inequality following the Gini concept, shown by the Covariance
formula, according to which the calculated Gini coefficient increases with the
measured inequality, and pictured by the Lorenz curve. Our results reveal
that, with a Gini coefficient of 0.32, inequality is considerably more
pronounced within the group of migrant than within that of the non-migrant
households, which displays a coefficient of 0.24. Fig. 1 shows the respective
Lorenz curves. The Gini index for all sampled households in the village is
0.34, which is above the national average of 0.32 and the migrant households’
index of 0.32, suggesting that migrants’ households contribute to more
inequality within the village. Interestingly, both household groups pooled
together result in a Gini-coefficient that is higher than both categories
calculated separately. Two factors are of determining influence in this
context: the higher inequality within the group of migrant households and the
high inequality between the migrant and the non-migrant households.
 181

Fig. 1: Lorenz curves for non-migrant and migrant households*)

*) The spaced line represents total households

Source: Authors’ illustration based on own calculations

Considering the single income quintiles, we found that the income share of
the poorest 20% is higher among non-migrant households, with 10.6%, than
among migrant households, with just 7.7%. For the richest 20%, in contrast,
the reverse holds: The income share amounts to 32.6% in non-migrant and
43.1% in migrant households (Table 11), confirming that the income variation
is considerably higher within the group of migrant households.
We also calculated the ratio of the average absolute income of the richest to
that of the poorest strata as an adequate indicator of the given income
distribution. In non-migrant households, the richest are 3.1 times better off
than the poorest, whereas in the group of migrants’ households, this ratio is
5.6, suggesting that remittances are more unequally distributed than the rest of
the income.
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Table 11: Inequality measures among respondent households

Inequality measures Non-migrant Migrant Total
HHs HHs
Gini Index 0.22 0.35 0.37
Gini from Lorenz curve 0.24 0.32 0.34
Share of poorest 20% (%) 10.6 7.7 7.2
Share of richest 20% (%) 32.6 43.1 42.6
Ratio richest 20% to lowest 20% 3.07 5.62 5.92
Source: Authors’ calculations

Hence, all indicators point to a significantly higher inequality among the

migrant than among the non-migrant households.

4. Summary and conclusions

Our results demonstrate that poverty is considerably more wide-spread and
more intense among the non-migrants’ than among the migrants’ households.
In addition to enhancing the current consumption level, remittances improve
the economic conditions of the households through increased potential for
savings and asset accumulation as demonstrated by the large share of other
income remaining after deducting the expenditures on basic needs. This
provides the migrant households with a chance for the sustainable
improvement of their material welfare as it could be invested into productive
and income-earning assets. The considerable difference between the poverty
rates observed across as well as within the two groups is essentially due to the
inflow of remittances in migrant households. These results suggest that
international labour migration is effectively changing the poverty situation in
the village of Bishankhunarayan.
Similarly, poverty measures yielded a lower head count index in migrant
households (10.4%) than in non-migrant households (28.3%), which was even
 183

greater than the national average of 21.16% (CBS, 2012a); also the Gini index
result showed higher inequality for the migrants’ household. Migration and
remittances have enhanced overall inequality in the VDC, and as the migrant
households have become richer, the non-migrant households have become
relatively more deprived. This also gives rise to considerable social tensions.
In such a situation also those whose incomes did not change in absolute terms,
but just in relation to the growing number of remittance-receivers, tend to feel
increasingly deprived. This is likely to push a self-perpetuating cycle of
migration, as shown empirically already in the 1990s by Stark and Taylor
(1991). Usually, not all community member households are in a position to
successfully follow this strategy, which might result in a left-behind trapped
population. The question remains open as well as worthwhile to be further
investigated if out-migration of and remittances from a significant share of the
VDC population leads to less poverty among the non-migrant households
(specifically via the spending effect of remittances and associated multiplier
effects) or, in contrast, to more wide-spread poverty among these households
(for example via increasing land prices and other asset prices due to migrant
households’ prevailing demand for conservative investments). This
culminates in the question of who are the winners and who are losers
depending on the individual household circumstances. For finding answers to
these questions, primary household data of different points in time and more
extended surveys would be required.

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 187

Part III

Intangible Costs for Left-Behind Family Members

188
 189

Social and psychological costs of labour migration in

rural areas of Nepal
Rosy Pun

1 Introduction
Globalization, industrialization, and rapid urbanization all over the world
have fuelled international labour migration processes. In Nepal, between FYs
2008/09 and 2013/14, more than 2,226,152 labour permits were issued, i.e. a
137% increase over six years, and corresponding to about eight percent of the
country’s population (Manandhar, 2015). Migrants’ remittances amount to
around 25% of the country’s GDP (World Bank, 2016), and various studies
demonstrate that they have significantly contributed to reduce poverty in the
country84. Countless families in Nepal use migration strategies to secure their
livelihoods and improve their material well-being. Still, doubts are raised that
temporary migration does not have lasting economic effects (Tomsa, 2009),
and several studies also point to negative impacts on left behind family
members. So, for example, a study done by CBS (Nepalese Central Bureau of
Statistics) in 2011 on the one hand attributes increasing school enrolment,
declining infant mortality rates and increasing nutritional intake in Nepal to
the inflow of remittances, but on the other hand an investigation carried out
by Wasti (2012) questions the sustainability of the economic impacts of
remittances claimed by such studies as her findings suggest that the contrary
could happen, i.e. the progress they seem to bring may be double-edged and
short term.
In 2015, an estimated 1,500 workmen left Nepal each day (Sedhai, 2015),
accelerating the number of separated families. With the departure of a key
84
Lokshin et al. (2007), e.g., calculated a decline in the poverty rate from 42% to 25%
between 1995 and 2009 due to remittances. See also Knerr 2017a, in this volume.
 190

household member, left behind family members’ lives are re-arranged, and
their roles and responsibilities within the households are adjusted and expand,
and individuals who fail to successfully cope with these changes may slip into
social and psychological crises inflicting short or long-term problems also
upon the larger family. Ukwatta (2010), e.g., found a higher prevalence of
marriage disruptions among female migrants as a result of their long distance
separation from family and household in Sri Lanka. A study conducted by the
NGO “Save the Children” also in Sri Lanka found that children left behind by
their mothers showed a number of negative developments, including loss of
appetite, weight loss among those under five years of age, and temper
tantrums, in particular among adolescents (Perera & Rathnayaka, 2013). In
addition, left-behind children display comparatively high school dropout
rates, poor academic performance, and problems in socialization and
psychological development (Biao, 2007; Khan Azhar, 2008). The growing
rate of female migration thus has brought up many new questions and
concerns. Also, although a large share of the international labour migrants
comes from low-income countries where elder population cohorts use to
heavily rely on their children for old age support (Antman, 2012), the impact
of increasing migration on elderly parents has hardly been studied yet85.
Our research was conducted as an explorative study to contribute to the
knowledge about and understanding of the social and physiological cost of
migration endured by spouses, children, and elderly, with the focus on the
case of Nepal, in order to provide a first basis for elaborating policy measures
which may help to improve their situation. The following section (2) will
explain the applied methodology, including a description of the study area,
section (3) presents the results and the related discussion, while section (4)
concludes and ends with some policy recommendations.

85
For some thoughts on this issue see (Biao, 2007)
 191

2 Methodology

2.1 Study area

The data for this study was collected in 2012 in Jhapa District, in the Eastern
Terai region of Nepal. The Terai accounts for about one third of Nepal’s
outbound labour migration, and Jhapa District holds the third rank among the
country’s districts, and the second position in female out-migration (IOM,
2014). Jhapa was selected for our study because it is one of the country’s top
labour exporting districts, with a comparatively high share of female
migrants. Undocumented migrants are prevalent in this district, moving to
work to India and other countries via Jhapa’s southern border with the Indian
state of Bihar.

2.2 Sampling and survey design

Our study investigates the social and psychological effects of migration on
left behind family members through the collection of primary data. The study
area, the municipality, and the wards characterized by a large share of
migrants’ households were selected by purposive sampling. We gathered
detailed information from three groups of household members - migrants’
spouses, children above 12 years, and elderly above 60 years of age - in 50
households, 25 of which were male and 25 female headed.
The survey design includes semi-structured interviews, supported by a
questionnaire, as well as some in-depth case studies. The unit of analysis is
the household where social and psychological problems encountered by
spouses, children, and elderly are assessed. The obtained primary data was
analysed by descriptive statistics.
 192

2.3 Psychological assessment tools

For the psychological assessment, two different tools were used: a) the Centre
for Epidemiologic Studies Depression Scale (CES-D) to assess the
psychological conditions of the respondents, and the Home,
Education/Employment, Eating, Activities, Drugs and Alcohol, Sexuality,
Suicide and Depression, Safety (HEEADSSS) assessment to specifically
study the migrants’ children psychological conditions.

Centre for Epidemiologic Studies Depression Scale (CES-D)

The CES-D was presented in 1977 by Laurie Radloff (1977) and revised in
2004 by Eaton et al. (2004). It is one of the most widely used instruments in
the field of psychiatric epidemiology. CES-D consists of 20 questions which
in our case are related to the respondents’ state of feelings they have after the
departure of the household member. Each question carries a score depending
on the frequency of occurrence (rarely = 0, sometimes= 1, occasionally= 2, all
the time= 3) of feelings on different subjects. All answers are finally tallied
to an aggregate score which is then matched with the CES-D score range to
assess the individual’s depression level. According to the CES-D score range,
a score below 15 is considered “psychologically healthy”, while a score
between 15 and 20 falls under the “mild to moderate depression” category,
and anyone scoring over 21 is categorized under the range of “possibility of
major depression” (Eaton et al., 2004).

Home, Education/Employment, Eating, Activities, Drugs and Alcohol,

Sexuality, Suicide and Depression, Safety (HEEADSSS) assessment
The HEEADSSS is a psycho-social assessment tool for adolescents, which
provides information on important areas of their lives. It was developed in
1972 as Home, Education/employment, Activities, Drugs, Sexuality and
Suicide/Depression (HEADSS) by Harvey Berman and later on further
 193

refined and expanded to HEEADSSS by Eric Cohen, who added Safety and
Eating as relevant aspects of life (Goldenring & Rosen, 2004). We used it in
our investigation as an interview guideline to collect data relating to the
migrants’ children’s psycho-social conditions.

3 Results and discussion

3.1 Social and psychological costs of labour migration

Some of the various social costs of migration registered during the field
survey were commonly shared by migrants’ spouses, children, and elderly;
others were specific to certain members of the migrants’ family.

Added responsibilities
After a migrant’s departure, added workloads and responsibilities are
shouldered by left-behind members. After the departure of their husband, who
usually is the breadwinner of the family, 88% of the wives were immediately
confronted with having to handle new tasks of financial management (e.g.
household budgeting, paying loans and expenses) as well as household
management (e.g. fixing and repairing, running errands, and social
obligations) (Table 1). Although some studies (Gartaula et al., 2012; Giri &
Darnhofer, 2010) claim that this process enhances female decision making
power, our study provides evidence that wives still seek their husbands’
approval in major decisions by communicating with them on a regular basis.
The situation for the left-behinds was different if the wife went abroad. Since
72% of female migrants had been full time caregivers, the major household
responsibilities then fell upon their husbands’ shoulders. Moreover, as almost
all husbands (95%) were engaged in income-creating activities, managing
household responsibilities (including taking care of children) together with
their work was found to be more demanding and stressful for them.
 194

Table 1: Added responsibilities of migrants’ household members

Only normal Added

Additional work Total
routine responsibilities
load
f % f % f %
Male members
Wife 3 12 22 88 25 100
Children 9 64 5 36 14 100
Elderly 6 67 3 33 9 100

Female members
Husband 1 5 18 95 19 100
Children 3 18 14 82 17 100
Elderly 0 0 5 100 5 100
Source: Authors’ field survey

More than half of the children in male migrants’ households were living a
normal routine after their father’s departure. In contrast, 82% of the female
migrants’ children had to deal with additional workloads and responsibilities.
Our data show that female migrants’ children are more subjected to additional
burdens as compared those in male migrants’ families. 67% of the female
migrants’ but just 13% of the male migrants’ sons had to adjust to added
workloads and responsibilities. Some of them even had to shoulder financial
burdens of the family. Bakker et al.’s (2009) research results show that often
the amount of remittances is so small that left-behind family members have to
engage in income earning activities. Our study supports this result as we not
only found spouses engaged in income activities in order to secure their
sustenance, but also children. Elder sons of both male and female migrants
were financially supporting the family by taking over temporary jobs (like
painting or selling newspapers).
All of the female migrants’ daughters had to deal with added work and
responsibilities, which was not the case for the male migrants’ daughters.
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Such transfer of work load and responsibilities from the absent mothers to
their daughters can cause overwhelming situations for the respective girls.
Like sons stepping into their fathers’ shoes, it is expected that the daughters,
granddaughters, and sisters provide care services to the rest of the family
when the mother has left. Since 95% of the husbands were working, the
daughters were looking after the father, the siblings, and (in case of joint
family) the elderly; they used to cook for the other family members, clean the
house, and wash. At the same time they are attending school. A father talking
about his 16-year-old daughter explained how she is handling all household
chores for him:
“I have no problem related to my household. My children are already big. My
daughter mostly does all the household chores. She prepares meals and takes
care of the household for us. She is mature girl.”
This demonstrates the enormous impact the migrants’ gender has on their
children’s situation. At the same time, children’s gender is also found to
determine the nature of additional workload and responsibilities to be
undertaken after their parents’ migration. While the daughters were found to
be more engaged in domestic work, the sons were more active in income
creating activities.
Also, elderlies of migrants’ families contributed considerably to household
chores. All the elderly respondents in our study were female. While 70% of
the male migrants’ elderly relatives kept on living their normal life, all of the
female migrants’ elderly relatives shouldered additional workloads and
responsibilities after the migrant’s departure which was particularly harsh for
them as, in addition to the daily household work, this included rearing and
taking care of the left-behind children. Upon departure of female migrants,
care services ultimately pass down to the female family members, i.e.
daughters and grandmothers. Hence, the extent of added workloads on
elderlies largely depends on the migrant’s gender.
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Members of nuclear households with growing-up children find it particularly

difficult to deal with the changes, basically due to lack of manpower.
Members of extended households, in contrast, seem to cope much better,
leading to less vulnerability in terms of social and psychological problems
due to the stronger support system within the household.

Marital conflicts
Our findings show that temporary labour migration is well discussed within
the families, and usually preparations are made for a smooth transition to a
post-migration functioning of the household. However, about one quarter of
the husbands of female migrants stated that they had been reluctant to see
their spouse leave because of reports about trafficking problems and cases of
abuse taking place over the transit and in the foreign country. Nevertheless,
some wives had migrated despite their husbands’ disapproval. These
“involuntary left-behind husbands” not only found it difficult to adjust to the
new household settings, but also showed some bitterness towards their wives
for going abroad, leaving the children behind and the house at disorder. This
situation fostered resentments towards the wives. Since 95% of the husbands
were engaged in economic activities, they showed less interest in their wives’
remittances, claiming that their own earnings were more or less sufficient to
take care of the household. For example, a 44-years old husband working in a
cloth shop and living with his two children aged 17 and 19 in a rented house
said during the interview:
“She left without my consent so I do not intervene on her matter anymore. I
even told my wife to save her earning with herself. I do not want to be a part
of it. She left the children when they need her the most; mother is a mother
after all. I am a father; I cannot step into their mother’s shoes.”
In contrast, 21% of the male migrants’ spouses were found facilitating their
husbands’ migration in order to seek economic stability at home. Some of
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them had cajoled them to migrate and had actively collected loans for
covering the migration expenses. Seeing the financial prosperity of other
migrants’ families, husbands get pressure from their wives or other family
members to seek employment abroad, making them in a certain sense
“involuntary migrants”. In such cases, the migrants’ spouses have high
expectations. When the migrant remits only small amounts or only
occasionally, they become dissatisfied due to the little they receive. Some
spouses of both male and female migrants in this context were found
suspicious and doubtful about their partners’ activities abroad. When the
migrant fails to remit, they complain about his/her thrifty character, and some
even spoke about possibilities of infidelity and spending money on another
man/woman. In those households, spouses also showed to be less
communicative with their migrated spouses.
A wife of a 32-year-old male migrant, who had basic primary education, ran a
small tea shop. She lived with her two children aged ten and seven years, and
with a small income she was struggling to manage the household expenses.
She complained about her husband:
“I did so much for him. I took a loan at a high interest rate and sent him
abroad, hoping that he will earn well so that we can live a comfortable life.
But all my hopes have faded away now. He hardly sent us any money. Some
friends who left with him are doing so well, except of us. I am very angry and
frustrated at him and at my situation.”

Dysfunctional families
In dysfunctional families, conflicts, violence, and abuses constantly take place
in the household context. Extensive workloads, management problems,
alcohol addiction, stress, anxiety, depression, and other disturbances can lead
to such misbehaviours as well as negligence towards oneself and other
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household members. Such problems progressively erode family ties, and

eventually the whole family may fall apart.
The majority of the migrants’ households (92% of the male and 88% of the
female migrants’ ones) seemed to be functioning well during the migrant’s
absence. Nevertheless, a certain part was found struggling to keep their
household together. A 52-years old husband of a migrant belonging to a
nuclear family lived with his three children of thirteen, ten and seven years.
Without formal education and fully dependent on remittances, he expressed
his wretched situation this way:
“My wife went to Kuwait, leaving three children behind. I am having a hard
time taking care of the household and the children. My children do not listen
to me and do as they like. I am not able to guide them properly; I feel
hopeless and helpless as I watch my family getting out of my control.”
In another nuclear family, the 42-years old wife of a migrant was addicted to
alcohol. She had two children, aged 14 and 11 years. The 14 years old
daughter talked about her mother’s drinking habit and negligent character:
“Me and my brother sometimes don’t get to eat on time. Our mother drinks
and falls asleep now and then. She mostly forgets to cook for us due to her
drinking habit. At such times we eat whatever is available in the kitchen. If
there is nothing to eat, we stay with empty stomachs or ask our friends for
food.”
All dysfunctional households were of nuclear families, indicating that such
families are more prone to problems as compared to extended ones. Extended
family members are more supported by one another, providing strengths that
tie the whole family.

Verbal abuse
According to Nepal’s traditional patriarchal social norms, males are allocated
the role of the bread-winner and females that of a care-giver. So, when
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married females take over income-earning responsibilities by venturing

abroad, husbands are found to be criticized. 42% of the husbands we
interviewed reported that their friends marked them as “hen-pecked husband”,
i.e. one who lives on his wife’s earnings, a word which is considered as an
offence. This purportedly oppressed their ego and self-confidence and made
them unhappy. A 38-year-old husband who owned a small bicycle shop with
an average monthly income of NRP 8,000 lived alone with his 12-year-old
son and his 59-year-old mother, who looked after the household and the
grandchild. He said that his physical health problems and acute financial crisis
led his wife to work abroad. He added:
“My friends taunt me, saying that I am a hen-pecked husband, but I know
deep down that this what they really think of me. It feels bad but what can you
do? Only I know my real situation, and under which circumstances I sent my
wife abroad so I don’t make an issue out of it; I listen from one ear and expel
such nonsense from the other side.”
Under such unstable conditions, for husbands who are in the process of
adapting to the new circumstances and the added responsibilities, such
comments can severely disturb their self-confidence and social life. Since
female labour migration is a relatively new phenomenon in Nepal
(GoN/MLE, 2015) the society has not yet accepted it to the extent it has
approved male migration. People still have reservations against it, thinking
that women belong in the house to provide care services to the other family
members to ensure their wellbeing and safety (Sijapati, 2015). Such social
norms and community perceptions can lead to biased views, provoking verbal
abuse of husbands of migrating women.

Depression
International migrants’ spouses, children, and elder relatives were found to
suffer from multiple psychological problems, struggling to lead a normal life
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in spite of being challenged by severe disorders. Our analysis of CES-D

shows that almost 40% of the migrants’ spouses were suffering from mild to
major depression. It is striking that in the category of major depression, the
share of wives is (with 20%) four times higher than that of husbands (see
Table 2).

Table 2: Depression status of migrants’ household members

% total
hh Mild Major
Normal health* Abs. %
member depression** depression***
Male migrants’ hh members
Wife 56 24 20 25 100
Children 100 0 0 14 100
Elderly 78 11 11 9 100

Female migrants’ hh member

Husband 68 26 5 19 100
Children 71 29 0 17 100
Elderly 0 40 60 5 100
*) CES-D score < 15; **) CES-D score 15 - 21; ***) CES-D Score > 21
Source: Authors’ calculation based on data from field survey

During our field survey, we met two wives suffering from severe depression
who openly talked about their occasional suicidal thoughts. Both of them
came from a nuclear family. One of them, aged 42, ran a small tea stall in her
house. She barely made profit due to poor business and was now on the verge
of shutting down her stall. With a tiny income and irregular remittances, she
struggled each day for the survival of herself and her three children aged 16,
14 and 12 years. Her 40-year-old husband was occupied abroad as a
construction worker. She expressed her feelings like this:
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“My husband does not send money frequently; even if he does, it is not
enough to stretch till the intended time. I took loans from so many people but
now no one trusts me anymore. People from whom I took a loan now come to
taunt me time and again, asking to return back their money. When they come,
I sneak out and pretend that no one is at home. Life is very difficult now.
When I told my husband about the financial problems our family is having, he
asked me to sell this house to pay the loans. But where am I going to stay with
my children then? I think I had enough, one day I will leave the house and
never return back.”
Similarly, another wife, aged 36, with primary education, was living alone
with her three children of 18, 16 and 14 years. Two of her sons had dropped
out of school. She sometimes sold homemade alcohol to gain additional
income. Her husband was working in Malaysia as a labourer. He remitted
only small amounts, making it difficult for her to survive:
“Life is getting very difficult now. I have to take care of everything. The
children are growing older and they do not obey me. My husband is in
Malaysia, and the money he sends us is not enough. So sometimes, I make
alcohol at home and sell it to people, or I go for a labour job a bit far away
from here so that my friends and neighbours do not find out about it. I am
trying my best to survive, but sometimes I feel really exhausted and
overwhelmed by the situation.”
This wife isolated herself by refusing to share her feelings with friends or
relatives. She emphasized that she did not want to reveal her vulnerable
position to others. Most of the left-behind wives suffering from depression
were living in tight financial conditions; some felt disconnected from their
husbands due to the lack of financial support. They also complained about
their demanding growing-up children, excessive work burdens and
overwhelming responsibilities. These circumstances caused stress, anxiety,
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and frustration, often ending in depression and in the worst cases led to
suicidal thoughts.
Such stressful psychological conditions of a parent were also found to be
quite damaging for his/her children’s health and mental stability. Due to
parental negligence, they used to become vulnerable to various abuses within
and outside the household. The analysis of the children’s depression scale
shows that all of the male migrants’ children were in normal health
conditions, but almost 30% of the female migrants’ children suffered from
mild depression, with 80% of them being daughters. As explained above,
female migrants’ daughters are burdened with various household
responsibilities, i.e. girls who formerly had been cared for had to become
caregivers. Such overwhelming changes were essentially causing the mild
depressions found among them.
Similarly, the CES-D test scores show that all of the female migrants’ elderly
suffered from mild to major depression. Almost 80% of the male migrants’
elderly, in contrast, apparently were living a normal life. Factors which
boosted the CES-D score amongst female migrants’ elderly were additional
household liabilities, financial burdens, taking care of grandchildren, and their
preoccupation about the migrant’s safety and security. Left-behind relatives
were well aware of the news about physical and mental abuse of female
migrants abroad, which are spreading permanently86, and they worried them a
lot.
Although also 22% of the male migrants’ elderly suffered from depression,
the causes were mainly related to concerns about the migrants’ welfare and
security, such as health conditions and financial situations and less due to
changes in their personal situation within the household. This is the example
of a 67-year-old mother of a male migrant who lived with her daughter-in-

86
See, e.g., Human Rights Watch (2012)
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law, aged 41, who was a full-time housewife, and her two grandchildren of 16
and 19 years. Her son had been working in Qatar for three years as a labourer
and did not plan to return soon, as he needed to earn enough money to repay
the migration costs. His mother was suffering from a heart problem.
“My son is working in Qatar. He is my only son and I have not seen him for
three years. Sometimes I feel that I would not be alive to see him again as I
am getting old and my health is deteriorating day by day. I want to see my son
one more time before I die.”
She added that her son was working under harsh conditions to support the
family, which made her worrying about him all the time. She was also
concerned about the financial situation, as she did not know when her son
would be able to pay off the family’s debts.

Loneliness
The most common psycho-social difficulties emphasized by both male and
female migrants’ family members are feelings of loneliness. These problems
were comparatively more prevalent among the female migrants’ household
members of, yet. The incidence was highest among the elderly (80%),
followed by spouses (68%), and children (65%). Interestingly, male migrants’
children were found to be least affected by this problems (see Table 3).

Table 3: Feelings of loneliness among migrants’ household members

Relation to the migrant Share suffering from loneliness (%)

HH of female migrants HH of male migrants
Spouse 68 60
Child 65 21
Elderly 80 33
Source: Author’s calculation based on own survey
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Feelings of loneliness among migrants’ wives were mostly due to the loss of
physical and emotional support and security that previously had been
provided by the husbands. However, it was also interlinked with broader
social and psychological issues. At times, women felt inadequate with regard
to managerial skills and exhibited low self-esteem when they had to make
decisions. Wives who belonged to extended families, in contrast, were found
to be less prone to loneliness than those of nuclear families due to the support
by other family members.
This kind of psychological problem was slightly more prevalent among left-
behind husbands. Even when being part of an extended family, they still
tended to feel lonely as they missed the care, concern, support, and love
provided by their wives. For example, a 39-year-old shop owner who lived
with his 61-year-old mother and his two children of 17 and 15 years and
whose wife had been working as a housemaid in Israel for almost three years,
shared his feelings of loneliness during the interview:
“I feel lonely especially when I come home from work. The house looks empty
without her. I miss homely environment, home cooked food. I also miss
chitchatting sweet old memories with her. She was my friend.”
The occurrence of loneliness differed considerably between male and female
migrants’ children: more than 75% of female migrants’ children felt lonely in
absence of their mother, but only 21% in the male migrants’ case. This
psychological factor can be related to the enhanced vulnerability to depression
found among female migrants’ children, highlighting the fact that maternal
love and care is vital for a child’s mental development. A female migrants’
14-year-old son who was studying in class eight and was living with his father
in a nuclear family expressed his sentiments like this:
“I miss my mother a lot. She used to love me and take care of me. But now
that she is gone, I feel lonely, even though my dad is here. But it is not the
same.”
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This result is supported by the research of Cortes (2015) and Jampaklay

(2006). Comparing the children of migrant fathers with those of migrant
mothers in the Philippines, Cortes (2015) found that specifically maternal
migration had an overall negative impact on children’s education, leading to
the conclusion that maternal absence is more detrimental than paternal
absence. Similarly, focusing on Thailand, Jampaklay (2006) found that long-
term maternal absence negatively affects children’s education, while paternal
absence does not.
Feelings of loneliness were found to be most prevalent among the female
migrants’ elderlies; 85% of them were exposed to this. Examining the
migrants’ relation to the elderly shows a clear link between their former
involvement in providing care and support to elder relatives and the rate of
loneliness found among those after the migrant’s departure: the higher the
migrants’ direct involvement with the elderly before migration, the higher
was the incidence of loneliness afterwards (see cross tabulation in Table 4).
All female migrants had been involved in taking care of elderly family
members; hence they missed the companionship, care, and support.

Table 4: Migrants’ interaction with elderly family members (%)

Personal situation Female migrants Male migrants’
elderly elderly
Direct interaction with the migrant
68 60

Feeling lonely after departure

65 21

Source: Author’s survey

Insecurity
More than half of the migrants’ wives felt insecure in the absence of their
partner. This was not the case for any of the husbands. A major reason of the
wives’ insecurity was their felt perception by the social community. They
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complained that people belittle them - e.g. by ignoring them and/or by passing
demeaning comments - in absence of their husbands, which made them feel
uncertain and diminished their self-esteem. As a result, they were restricted in
their activities and compelled to live an isolated life. These findings
correspond to those of ILO (2008), saying that the personal security of
migrants’ wives was affected, as they became prone to harassment and to
unseemly advances by other men, including family members of their own
spouse. A wife, 26 years old, who worked as a sweeper in a school and lived
with her 8-year-old son and 58-year-old mother-in-law in an extended family,
explained her insecurity this way:
“I try to avoid chit chatting and mingling with my friends because my mind is
always occupied with my child and my mother in law at home. I also maintain
a distance with any male colleagues; I do not want them to take advantage of
me, nor do I want anyone to raise questions about my fidelity.”
Among children, feelings of insecurity in general were quite low, but they
were somewhat higher among the female migrants’ children. Children of
migrants, especially those of widowed female migrants, were found to have
problems of insecurity as they missed the protection, including care and
concern, from their mothers. A 15 years old girl, staying with her aunt after
her mother had gone to Saudi Arabia to earn a living after her father’s death,
was reserved and withdrawn, so her situation was explained by her aunt,
instead of herself:
“She lost her father four years ago, and now recently her mother left to Saudi
Arabia due to financial problems at home. I feel really sorry for her as she
finds it difficult to mingle with her friends. She has become more reserved and
isolated after her mother has left.”
The aunt also added that after the mother’s departure, the girl felt lonely and
insecure, once having bidden good bye to the only family she had.
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Almost half of the female migrants’ elderly shared the feeling of insecurity. It
was mostly related to the migrants’ and the family’s welfare. In the first place,
they worried about the migrants’ health and living conditions. Secondly, due
to their own age and deteriorating health conditions, they were concerned
about their grandchildren’s future, being afraid of what would happen to them
and who would take care of them and of the household if they would no
longer be able to shoulder these responsibilities themselves.

Doubts and infidelity

Only a minor share of the migrants’ spouses expressed doubts on their
migrated partner’s fidelity. Nevertheless, it is a serious issue as it has severe
repercussion on the marital relationships and may even lead to separation and
divorce. 12% of the wives articulated some suspicions related to their
husbands’ behaviour, emphasizing that their husbands were not sending
enough remittances because they were indifferent towards the situation of
their left-behind family. Some questioned their husbands’ fidelity towards
their marriage. These doubts were primarily based on perceived changes in
the migrants’ behaviour and attitude after their departure. But some were just
triggered by suppositions, hearsay, and media reports about migrants’
mobility and health issues, such as AIDS and other sexually transmitted
diseases. Also, some husbands purported that their wives’ behaviour had
changed after their departure; in particular, that they disregarded their
opinions and did what they preferred without caring about their souse’s
approval. Some even suspected that their wives were saving part of the
remittance elsewhere without their husbands’ knowledge. Such doubts and
resentments damaged not only the marital relationship but also the whole
family.
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3.2 Coping strategies

The way people deal with their problems affects their physical, psychological
and social well-being. The migrants’ left-behind household members used
various affirmative strategies to cope with the social and psychological
implications of their situation in order to maintain their life balance. However,
some maladaptive behaviour were observed during our study.
Analysed from the perspectives of “problem-focused coping strategies” and
“emotion-focused coping strategies” (Folkman & Lazarus, 1980), migrants’
families were found to be involved in both types of strategies. While
communication, use of social support, and visits by migrants were more
problem-focused strategies, substance abuse and isolation were emotion-
focused strategies. Altogether, we found that women were using mostly
emotion-focused strategies.

Support within the household

Among the most important backup resources of individuals are usually those
provided by other household members, as they share a mutual understanding,
family ties, and interdependence implying reciprocal help as well as
emotional and physical support. In fact, the majority of the migrants’ relatives
pursued this strategy. 85% of the migrants’ wives sought support from
household members which also included calling the husband for advice and
assistance from time to time (Table 5). This behaviour is most common
among extended families as they share work and responsibilities. It is also
used among nuclear families with grown-up children who work together with
the parent. However, it is difficult to get support in a household which
essentially includes small children, and aging and sick elderly who
themselves need assistance.
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Table 5: Support from household members

Seek support from other HH members
f %
Male migrants’ hh members
Wife 21 84
Children 14 100
Elderly 9 100
Female migrants’ hh members
Husband 15 60
Children 17 100
Elderly 5 100
f = frequency of respondents
Source: Field Survey

Communication
One of the most widely used coping mechanisms used by migrants’
household members in our survey results is long distance communication with
the migrant, especially via internet, mobile and landline telephones,. It brings
them closer to each other, despite the distance, and helps to sustain mutual
understanding and support. Especially wives are found to be more confident,
mentally stable, and able to handle pressure when they have regular
communication with the migrant.
Migrants’ children were found to be less communicative with their migrated
parent than the other household members. More than half of the male
migrants’ children did not interact with their father at all. This shows that
male migrants are quite dependent on their wives to receive information about
their children. Also, guidance and support from the father to his children tends
to be lacking in male migrants’ households. Nevertheless, these children were
found to fare much better than female migrants’ children due to the care
provided by their mothers, which protected most of them from developing
social and psychological problems. At the same time, female migrants’
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children were more in touch with their mother than those of male migrants;
almost 75% of them communicated with her on a weekly basis or at least once
every two months.
Communications between migrants and their elderly family members differed
distinctly according to the migrants’ gender: female migrants were found to
be more in contact with them than was the case for male migrants.

Relatives and neighbours

Close relationships with relatives and neighbours provide vital social support
networks to the household. Most of our respondents - more than 90% of the
members of female and 84% of those of male migrants’ households - found
their relatives and neighbours helpful during lean periods. In particular
husbands belonging to nuclear families depended very much on this social
network with regard to the child care and household management. Also, a
large share of the wives belonging to nuclear families relied on their relatives
and neighbours. In this context, a cloth weaver, aged 36, living alone with her
14-year-old child while her husband had been working in Kuwait as a security
guard over the previous two years, explained her views on her relatives and
neighbours:
“Even though my husband is not around, I feel safe and secure because I
know everyone around me. Our family shares good relationship with all of
them, so if I am in need, they always extend their help to me.”
However, the other wives were reluctant to open up household issues to
outsiders in order to protect themselves and their family.
The importance of social support by relatives and neighbours was well
understood by the migrants and their household members. Many respondents
confirmed that the migrants themselves had requested their relatives and
neighbours to help their relatives in case of need during their absence.
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Visits by migrants
Family visits by the migrant are important to maintain marital bonds with
spouses and other family members. Most migrants visited their family once
every two to three years. Due to comparatively high travel expenses and lack
of employment documents, many migrants could not afford to undertake more
frequent family visits. Yet, even occasional visits were found to strengthen
family bonds. Assets and gifts brought along by the migrant during their visits
also brought additional pleasure to the family members as they helped to fulfil
financial and material needs.

Social activities
Some of the migrants’ household members used to be involved in social
community activities and gatherings. Various public associations are existing
in the study area, such as mothers’ clubs, fathers’ clubs, youth clubs, and
indigenous groups. Involvement in social gatherings provided physical and
emotional support, and opened getaways to keep left-behind relatives
occupied in a positive way, supported their self-confidence, and enhanced
their self-esteem. Most of those who participated in social gatherings were
from households that gave them free time to do so, for example because they
had grown-up children, or supportive in-laws. They were also more educated,
had an above-average financial background, and, in particular, a regular
income.
A wife of 36, working as a weaver, was involved in economic group activities
along with six other women. They wove and sold their products together at
the market and made good profit by these activities. She came from a nuclear
family background and lived with her 12-year-old son. She had attended
primary school. These were her experiences:
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“I think migrants’ families should not just rely on remittances; we also have
to do something for our own income and keep ourselves busy. Since I work at
home I do not have to worry about my household and my child. Our weaving
group members come together not just for the purpose of economic gain, but
we also seek and provide support to one another.”

Substance abuse and isolation

Substance abuse and isolation are maladaptive behaviours and negative
coping mechanism practiced by some of the migrants’ household members.
During crisis periods, when every social support system failed, some persons
turned to substance abuse. One of the cheapest and most accessible products
for that purpose is alcohol. Also, some of the wives and children were found
to be introverted and isolated due to the loss of a family member and the
social and psychological conditions discussed above. Such maladaptive
behaviours might further entail aggravated psychological problems, such as
low self-esteem or suspicions towards the migrated spouse’s activities which
ultimately leads to a downward spiral.
One of the alcohol addicted wives, aged 42, lived with her two children of 11
and 14 in a nuclear family. Her husband, aged 40, was working in Qatar on a
construction site. She described her situation like this:
“I do not know how to deal with my problems. I do not know where to turn
to. I am always thinking and worrying most of the time. I drink every day.
Drinking sedates me and I feel a bit lighter even though it is only for some
time.”

4 Conclusions and recommendations

Most of the Nepali international migrants are employed as blue-collar workers
earning low wages under harsh conditions, being exploited and often
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abused87. At the same time, their left-behind families and household members
are also suffering from various social and psychological problems due to the
separation. We found that male migrants’ household members were facing
less of such problems than those of female migrants. Since males are regarded
as the breadwinners, most household members felt comfortable seeing them
traveling abroad in order to fulfil their role. Still, some wives suffered from
social and psychological problems, as they felt vulnerable due to the loss of
their husband’s support and protection.
While male migration is readily accepted in Nepal’s society, independent
female migration has always raised questions (Bhadra, 2007; Sijapati, 2015).
From our study, we conclude that concerns in this context are relatively
rational as female migrants’ husbands, children, and elderly were found to be
significantly more negatively affected by female migration than by male in
terms of suffering from hardships like work overload, depression, loneliness,
and insecurity in absence of their wife, mother, daughter, and/or daughter-in-
law. Despite these adverse impacts, the trend of female migration is taking
momentum in Nepal (Sijapati, 2015), entailing higher social and
psychological tolls for the left-behind household members.
Post-migration social and psychological costs differ from family to family,
depending on the various influencing factors, such as household attributes;
migrants’ as well as individual household members’ personal characteristics;
financial situation; and community perception of the migration. To cope with
these challenges, migrants’ relatives mostly relied on other household
members, relatives, and neighbours, as well as direct communication with the
migrant. Still, some were found using maladaptive behaviours when the
support system weakened or failed. We found that members of nuclear

87
See, e.g., UN 2014.
 214

households are more prone to social and psychological problems as compared

to those of extended families.
Government migration policies in Nepal mostly focus on the migrants’ rights,
protection, and welfare. However, no adequate policy is in place which would
safeguard the migrants’ left-behind family members. To fill this gap, the
Ministry of Women, Children and Social Welfare could assume a vital role in
mitigating the various social and psychological costs which our study found
the migrants’ household members were suffering from. The Department of
Foreign Labour Migration (DoFE) of Nepal is providing an orientation to
thousands of migrants before they leave. However, providing advice about
necessary household arrangements and managements before departure and
about the significance of maintaining contact with household members during
the separation would be of utmost importance, besides disseminating
information about the destination, customs, and labour rights. It is essential
that the migrant is informed about changes and possible occurrences of social
and psychological problems at home which might occur after his/her
departure.
Our findings demonstrate that many of the migrants’ household members
suffer from mild to severe psychological problems. In particular, severe
psycho-social problems need to be closely monitored and eventually treated.
However, there is no specific institution available in Nepal that provides such
counselling services to the needy, while at the same time, counselling stations
are urgently required to protect vulnerable migrants’ household members.
They could be put in place by the Nepal Government as well as Civil Society
institutions (INGOs and NGOs). Those who are already actively working for
the migrants’ rights could extend their tasks to reach out to migrants’
communities for providing this urgently needed support.
 215

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 217

Part IV

The Nexus between the Development of Human and

Social Capital and Migration
218
 219

Returnee organizations of highly qualified in Nepal:

integrating human capital and social capital.
The Nepal German Academic Association (NEGAAS)
Roshana Shrestha and Béatrice Knerr

“Social capital provides the glue which facilitates co-operation, exchange

and innovation.” (OECD 2001)

1 Introduction

The essential role human capital plays for economic development is

undisputed among scientists and practitioners (Becker, 1994, Istaideyeh,
2011). The theoretical foundations for the related research area were laid by
Schultz (1971) who highlighted that people invest in their human capital to
maximize the present value of their lifetime earnings, and by emphasizing the
significant relationship between education and human capital. He explained
that it could be enhanced by productivity-increasing investment in human
capital through education, experience and vocational training, and explained
that the quality of the workforce plays a significant role in the development of
an economy. Sjaastad (1962) in this context viewed migration as an
investment in the human agent in the same way as education. Migration and
education are decisions that are closely intertwined in many respects. The
desire to acquire knowledge and skills in the host country that later on would
bring positive returns in the country of origin (or in a third country) is often
the major reason for international migration (Dustmann and Glitz, 2011:1) In
 220

particular for low-income88 economies like Nepal, it is essential that students

accumulate human capital also at foreign institutions of higher education and
bring it back to their home country. Social networks play a prominent role in
this context. As highlighted by Geys & Murdoch (2015: 523): “An increasing
number of studies state that the build-up of Diaspora networks, and return
migration, or a combination of both are beneficiary to the sending countries…
These networks can be scientific in nature and contribute to the transfer of
knowledge and technology either virtually (e.g. through the internet) or
physically through forums and exchange programmes for scientists between
the sending and the receiving countries.” In this context the results of, for
example, Klein-Hitpaß (2011), Iredale et al. (2003), and Hunger 2003) are of
interest89.
Social networks build on social capital90 (which is a form
of economic and cultural capital). Transactions in this framework are
characterized by reciprocity, trust, and cooperation. For that purpose,
returnees associations play a decisive essential role by helping to sustain and
intensify the relations with the former host countries; mobilizing resources;
enhancing synergetic relations among the returned; organizing events; and in
general maintaining bridges between the home country and the former host
countries. As such, they incorporate both bonding social capital formed by a

88
Per-capita income in this context is defined as the Gross Domestic Product of a country
divided by its current population. The categorization corresponds to the that of the World
Bank according to which low-income countries are defined as those with a per-capita
Gross National Income (GNI), calculated using the World Bank Atlas method, of
US$1,045 or less in 2014 (World Bank, 2016).
89
For more details see, for example, Carrington et al., (eds.) (2001)
90
Social capital is defined by the OECD as “networks together with shared norms, values
and understandings that facilitate co-operation within or among groups”. (Keeley, 2007:
102) This can be networks between groups or individuals (e.g. of friends, family members,
former colleagues, and so on).
 221

joint past as students in the former host country91, and transnational bridging
social capital. They constitute bonding networks connecting ‘people who are
like one another in important respects’ as well as bridging networks which
link ‘people who are unlike one another’ (Putnam & Goss, 2002:11). Both can
be interrelated in many ways. Access to information and influence through
social networks can also convene private benefits and support dominance or
privileges to individuals.
Hence, in addition to new knowledge and competencies returned academics
usually also bring social capital with them, and thus are keys for networking
with the former host country (Zhao & Knerr 2015). Returnee organizations
play a prominent role in this context as they can bind together scattered
connections and relations, create synergy and leverage effects, and thus
enhance the networking potential. For former host countries they can offer a
catalyst for research activities; they may contribute to strengthen diplomatic
ties; help to make better use of acquired transnational human capital 92; and
facilitate cultural and information exchange. The Nepal German Academic
Association (NEGAAS) 93 as an association of highly-qualified returnees from
Germany has been founded in 1986 in this spirit to take over such
responsibilities. Our article shows how far this has been achieved, but also
identifies some bottlenecks which prevent it from further unfolding its
potential. By doing this it sheds light on the benefits NEGAAS can bring, and
on the challenges it faces.

91
“Bonding social capital” includes interactions with family members, relatives and friends, while
“bridging social capital” refers to the socially heterogeneous ties connecting people in horizontal
associations (Zhao, Ma, & Knerr 2015).
92
Transnational human capital comprises skills like foreign language competences and
intercultural competences. In the context of globalization process transnational human
capital is gaining increasing importances as shown by Gerhards and Hans (see Gerhards &
Hans, 2013).
93
Web address: http://nepal-german-academic-association.blogspot.de/
 222

The article is organized as follows. After this introduction, section (2) will
explain the situation of Nepalese students in Germany, including their
personal characteristics, circumstances of studies and future plans. Section (3)
presents NEGAAS’ history, while Section (4) shows its organizational
underpinning and the structure of its member community and the
achievements of some of its distinguished members. Section (5) provides
information about NEGAAS’ major activities, reaching from workshops over
meetings with politicians up to publications. Section (6) draws conclusions
and develops some perspectives.

2. Nepalese students in Germany

In 2015, 5,502 Nepalese were officially registered as living in Germany, a rise
from 2,38494 i.e. by more than the double, in 2011 (Statistischen Bundesamt,
2016). 45% were women. Their average age was 30.6 years and on the
average they already had stayed in Germany for 6.6 years. The largest single
diaspora group is found in Munich, where even a Nepalese temple garden
with a pagoda exists. Smaller communities also exist in the university town of
Göttingen, in Berlin and in Hamburg.
About one quarter of the Nepalese in Germany are students. In 2014, 1,134
Nepali students were enrolled in German Universities, following a stable
upward trend from 319 in 2006 (DAAD & DZHW 2015). Over the period
from 2007 to 2013, 479 of them graduated (resulting from a steady increase
from 11 in 2007 to 138 in 2013) (DAAD&DZHW, 2008 to 2015), and many
of them returned to Nepal after their graduation to contribute to the country’s
development in various ways, in particular by engaging in national and
international institutions. In general, since the 1990s, the number of Nepalese
studying overseas has strongly increased. Although the overwhelming share
94
This figure is taken from the German government’s central register of foreigners
(“Ausländerzentralregister”). It differs, however, from the results of Germany’s 2011 Census by more
than 30% which counted 3,160 Nepalese in Germany (Statistisches Bundesamt, 2016)
 223

of out-going Nepalese students moves to English-speaking countries, a

mentionable number of them are enrolled in German institutions of higher
education95.
Except for a survey done by Nepal and Knerr (2015) there is no specific
empirical research available on the situation of Nepali students in Germany.
Although not representative by design, this study provides valuable material
which might be used as input for policy making and for further research. It
included 59 respondents - corresponding to around 10% of the Nepalese
student population in Germany at the time of the survey - identified by
snowball sampling who were interviewed at different universities in Germany
with a semi-structured questionnaire. 44% of the interviewed students came
from the Central Region, where inhabitants generally have better access to
information and are more aware of the internationalization of higher
education than those from other areas96. Just 1.8% came from the Mid-
Western and 3.6 from the Far-Western Region which are characterized by
lower educational level and a lack of access to information which implies a
reduced student mobility in these more remote regions. This is not surprising
as migration to foreign countries requires resources in terms of time, money,
and information to gain access to the required travel documents,
accommodation abroad and other facilities, thereby rendering it unaffordable
to the poorer sections of society.
Almost 60% of the respondents were studying for their masters, 18% for
bachelor, and a few were enrolled in PhD programs. 67% were studying with
English as the major language of instruction, i.e. their acquisition of German
language competences over their studies is limited. The survey results
indicate that Germany attracts Nepalese students mainly in the fields of
95
According to UNESCO, in 2013, a total of 30,186 Nepalese students were enrolled
abroad, 9,168 of them in Australia, 7,753 in the USA, 2,426 in India, 1,741 in U.K., 1,166
in Finland, and 635 Germany (i.e. rank 6).
96
For interregional differences of socio-economic conditions in Nepal see UNDP (2014).
 224

natural sciences, engineering, and agriculture: one-third studied engineering

and technology, followed by agricultural sciences and engineering (14.5%),
and medicine (12.7%). Altogether, those pursuing a master degree in
engineering and technology formed the largest group with almost 22%.
73% of the respondents were men, demonstrating the overall gender bias of
the foreign Nepalese student population which can mainly be ascribed to the
predominance of Nepal’s patriarchal society. All respondents were younger
than 40 years, and almost 40% were between 26 and 30. 38.2% were married,
and almost 30% of them had left their spouse in Nepal.
Less than half of the respondents had attained a secure external source of
funding. The rest were managing their livelihood expenses by doing part-time
work or/and with financial support from their family. 61% of the scholarship
holders received funding through a German grant (mostly from the German
Academic Exchange Service, DAAD); 23% from a German university; and
11% from some religious organization. Almost 60% were engaged in paid
employment beside their studies. For 66% such jobs were necessary to cover
the living expenses; a second reason was the motivation to become
economically independent from one’s parents; and a third was the wish to
gain experience for career enhancement. 32% were also motivated by the
desire to build social networks, and 16% worked to support their family back
home.
As their main reason for studying in Germany 30% of the respondents named
good study conditions, as well as the comfortable infrastructure and
equipment in the universities. 63% had come to gain research experience in a
specific field; 61% were attracted by the good reputation German institutions
enjoy in Nepal; and 28% wanted to experience a higher degree of academic
freedom97. The most important non-academic reasons to choose Germany

97
Multiple answers were allowed.
 225

were financial ones. On top was the exemption from tuition fees, which was
the case for 56% of them, while 31% had been attracted by the possibility of
funding their studies via casual work. 19% wanted to escape the socio-
political situation in their home country; and the same share cited a desire to
experience a new culture.
61% of the respondents rated themselves as performing well in their studies,
20% as excellent; and 16% as average. Some students reported that they do
not perform well because they are unable to focus on their studies due to
challenges in adapting to the new culture and environment, heavy workload to
earn money, health problems or other personal troubles. The survey revealed
that many Nepalese students in Germany suffer from discomforts and
hardships. This applies especially to those studying without a scholarship who
must find employment alongside their studies to secure their livelihood.
Returnees who have upgraded their competences while abroad can have a
positive impact on their home country’s development. However, studying
abroad instead is often a pathway to permanent emigration. This applies also
to Nepalese students who had chosen economically advanced countries for
their high-quality education. Many of them seek to stay there permanently.
9%, of those interviewed in the study of Nepal & Knerr (2015) declared that
they intended to remain in Germany after their studies; all of them were
master students. This share was highest among those studying engineering
and technology (with 7.3%), and their intention to stay had even increased
over the duration of their studies. No students of other fields planned to
remain in the country, except for a modest share (1.8%) of those studying
medicine. The students were not asked for their plans to move to a third
country after graduation. However, empirical evidence and experiences show
that Nepalese generally consider North America as a particularly attractive.
The comparatively high share of those stating to be unsure about whether to
stay in Germany or to return to Nepal (25.5%) might reflect the respondents’
 226

consideration of relocating to a third country. The German economy, on the

other hand, might benefit if more Nepalese graduates would choose to stay in
the country after their graduation, especially since a large share of them is
specializing in fields, which are in high demand on the German job market,
mainly engineering and medicine.
The decision to return home is highly influenced by expectations of political
and economic changes in the home country98. If the economic and political
conditions, which had originally encouraged migration – or at least had a
major influence on that decision - would not change, there is less motivation
for going home. This seems to be an important aspect of the return behaviour
of Nepalese migrants, many of whom hesitate to move back primarily because
of the persisting political instability in the country.
In Box 1 an international student from Nepal describes how he made his way
from a Nepalese village to a German University and gives account of his
academic and social life experiences in Germany.

98
For a general overview of motivations, potential advantages and disadvamtages of reeturn migration see,
for example, King (2000).
 227

Box 1
My experiences as an international student in Germany
by Sunil Kafle

I was born in a small village of Syangja district, Nepal, where I experienced

an intrinsic feeling of pleasure as well as pain because of hardships in daily
life and difficult landscape surroundings. Our livelihood was primarily
dependent on the internal remittances from my father who worked as an
instructor for Junior Technical Assistants (JTA) in Jiri Technical School, Jiri
Dolakha and used to return once a year during the major festival. It was also
partly supported by livestock and agricultural related activities which were
primarily performed by my mother and as children my brother and me, when
trying to help her, often got in the way of her work, probably causing
occasional delays and obstructions. I started my academics by studying
agricultural science at Tribhuvan University (Nepal) and after my graduation
began to work in a non-governmental organization which was primarily active
in sustainable agriculture and environment conservation. The projects were
funded mainly by two German non-profit organizations, namely GLS
Treuhand and MISEREOR. My work experience and communication with
people from Germany inspired me to continue my further studies in Germany,
under the master program Sustainable International Agriculture (SIA).
Similarly, the high reputation of international university degrees in Nepal for
one’s career path as well as my own motivation to explore a new culture and
society and - more importantly - the education system in an economically
advanced country eventually brought me to the small and beautiful University
town of Gottingen.
At the beginning my life in Germany was equally interesting as well as tough.
It was difficult for me to adjust to the cultural differences with only basic
 228

understanding of the German language, and also to the harsh chilly winters.
Initially, the Nepalese community assisted me especially in administrative
issues and in finding an apartment and it also comforted me during moments
of homesickness. Being apart from my beloved family always strained me and
this burden was exacerbated by the earthquake of 2015.
The academic environment I found was very different from what I had been
used to, especially with regard to easy access to scientific journals and a well-
equipped library with strong infrastructure which are merely available in
Nepal. This constituted a convenient environment and a strong motivation for
my studies. I felt that whatever I chose will become a stepping stone for my
academic development and for my future professional career. But this
motivation often has been tarnished by my financial situation as I have been
self-financed and thus always remaining under the pressure of doing a paid
job. In spite of these struggles and - at the time I am writing these lines -
finally being in the stage of finalizing my studies I hope to be able to explore
the area of agricultural development and research with new insights and
knowledge to be gained during my stay in Germany. I believe that my
academics studies and my interactions with international students have
considerably widened my scope of thinking as compared to before. I enjoy the
cultural diversities among international students which gave me the
opportunity to become acquainted with large ranges of different food,
entertainment and clothes. After my graduation I am planning to work in my
home country and I am strongly motivated to join to communities which have
experienced life and studies in Germany. I hope we can share our common
experiences and exchange academic ideas and competencies in a
multidisciplinary way to lay new foundation in areas related to research and
developmental in Nepal.
 229

3 NEGAAS History
In August 1986 a group of Nepalese scholars having acquired their academic
degree, undergone training and/or conducted research in various institutions
of higher education in the Federal Republic of Germany (FRG) founded the
Nepal German Academic Association (NEGAAS) - the first ever established
academic association of Nepalese nationals - as a non-profit organization with
the aim to strengthen the relations between Nepal and the FRG and the basic
idea to enhance mutual understanding and cooperation among the
academicians of both countries in social, scientific and technical fields. Its
mission thus is to develop NEGAAS into a forum for the Nepalese / German
academic community. Towards this goal NEGAAS since its foundation has
organized numerous events, like workshops, seminars and conferences
providing opportunities of mutual knowledge transfer and cultural exchange.
The mastermind in conceptualizing, forming and running NEGAAS was Dr.
Basanta Lall Shrestha. He was the architect as well as the genuine promoter
and preserver of NEGAAS, and helped enhance its image by adding new
dimension to it.
Through monthly gatherings, lectures, seminars and publications NEGAAS
provides the opportunity for social/cultural educational promotion. At the
same time it encourages the exchange program between Germany and Nepal.
In this way NEGAAS has played a vital role in representing the Nepalese-
German-academic community in a united and organized way and through its
activities offers a meaningful contribution to society.
At the beginning, the criterion for being eligible as a NEGAAS member was
to hold or pursue an academic certificate (bachelor, master, PhD) from a
German University. Due to that requirement, many persons who had studied
in Germany, but did not finish with a certificate were unable to join
NEGAAS. In order to provide an umbrella for them, a similar organization,
the Society of Nepali German Academicians (SONGA), was founded. In
 230

order to integrate them into NEGAAS and also to strengthen NEGAAS in

terms of membership, an amendment to the NEGAAS rules was made in
2003, determining that any persons who has studied at least one year in
Germany and possess a certificate of performance from a German institution
of higher education would be eligible to become a NEGAAS member.
NEGAAS is not the only German returnee organization, but in 2015, it is the
largest one of 11 alumni associations99 of academicians trained in Germany.
Having started with just five members in 1986, by 2015 it had 68 Nepalese
life members with academic degrees from German universities.

4. NEGAAS Organization and Members

NEGAAS is headed by an Executive Committee which consists of a
President, a Vice President, a Secretary, a Treasurer, and five to nine
Executive Members who are elected every two years. Immediately after the
election a planning workshop is carried out, where the new (or re-elected)
members have the opportunity to present and discuss their ideas. On that
occasion, also a timeline for the activities planned over the coming two years
is fixed, and teams to facilitate their implementation are established. At the
end of each year, the achievements and the progress of on-going activities are
reviewed. In a general meeting the results are discussed and experiences about
success and failures are shared. To disseminate the information about
activities and accomplishments, NEGAAS also publishes a regular
Newsletter/Bulletin. Per Nepalese law, the transparency of NEGAAS’-
administrative and program activities is to be audited by legal authorities each
year.
NEGAAS members are professionals from diverse fields and holding
different responsibilities, such as medical doctors, engineers, natural

99
Status in May 2016.
 231

scientists, food technologist, mathematician, management consultant, and

economists. Many of them have attained high positions in the academic or
administrative sphere, for example, just to name a few, as ambassador, consul,
undersecretary of state, university professor, dean or head of department
which also indicates the intense knowledge transfer from Germany to Nepal.
One of NEGAAS’ members who had contributed significantly to Nepal’s
development is the Late Prof. Dr. Dayananda Bajracharya. He was a well-
known researcher, who contributed significantly in the field of Science and
Technology, and Vice Chancellor of the formerly named Royal Nepal
Academy of Science and Technology (RONAST), which after the end of
Nepal’s monarchy was renamed as “Nepal Academy of Science and
Technology” (NAST).
Late Dr. Bansanta Lall Shrestha, the founding member of NEGAAS as
mentioned above, was a pioneering entrepreneur in the field of Ultrasonic
Diagnostic. He was the first medical practitioner in Nepal to establish a
Research Centre for that purpose, and it became a milestone in the medical
history of Nepal. Since 1983, in addition to serving the society with his
technical expertise in the ultrasonic field, he also trained numerous physicians
on Diagnostic Ultrasound and conducted research in this field. In this capacity
he contributed decisively to improving the health and welfare of the Nepalese
people. Altogether, his works served as benchmark in the Nepal Medical
Society.
NEGAAS granted honorary membership to the ambassadors of FRG to
Nepal, namely: H. E. Dr. Klaus Barth, H. E. Franz Erwin Ring, H. E. Verena
Grafin von Roedern, H. E. Franz Myeke, and H. E. Mathias Meyer, as well as
the Nobel Laureate Prof. Dr. Klaus von Klitzing, Director of Max Planck
Institute for Solid State Research, Stuttgart.
As a self-supporting organization NEGAAS always has to take care of
budgetary constraints in its activities. The annual NEGAAS membership
 232

charge is NRs 400, and to be a life member a lump-sum fee is NRs 3000 has
to be paid. This discourages many interested from becoming a member.
Moreover, to organize most of the actions, its members have to contribute a
certain amount of money which causes many to refrain from participating. In
general, organizing any kind of event is difficult due to resource constraints in
terms of money, manpower, material, and/or space. In particular, without the
financial support by DAAD, many major events, like seminars and
workshops, could not have taken place.

5. Activities
Activities carried out by NEGAAS extend from publication of NEGAAS
news, over organization of exhibitions and to offering seminars. Some
examples are presented below.

Publications
NEGAAS regularly publishes the annual “NEGAAS News” since Vol. 1 in
September 1994. Shortly after its foundation, in 1987, jointly with the Goethe
Institute, Kathmandu, it published a booklet on “Alternative Energy
Technologies in Nepal”. In addition, it has issued the following bulletins: a
NEGAAS souvenir issue in 2011; another NEGAAS souvenir issue at its
silver jubilee in 2014; and a silver jubilee souvenir issue on the occasion of 50
years of Nepal German diplomatic relations. On its website NEGAAS has
posted a number of interviews with different key persons, for example with
executive members of Germany institutions of higher education; with German
Ambassadors in Nepal; with heads of German International Non-
Governmental Organization (INGOs) in Nepal, and with the first Nepalese
holding a German academic degree.
 233

Seminars
NEGAAS has organized several seminars on topical contemporary subjects
related to the academic sector. In 2008 it organized a seminar in Kathmandu
on “Bilateral Diplomatic Relation Contributing To Health Education: A Step
Forward New Future”, and in 2013 and 2014, seminars were performed on the
topics of “Engineering Education and Research in Nepal”; “Nano
Technology”; “Nepal in Nuclear Age”; “Conflict Management”; “Peace and
Development”; and “Mind Management”.

Workshops
Between 2007 and 2016, NEGAAS organized several workshops which were
funded by German Academic Exchange Service (DAAD). In 2007, it
organized a training course on “Qualitative Research Methods” and a one-day
symposium on the same topic. In 2011, it hosted the ”Workshop on Disaster
Management”, conducted by Prof. Harmacher (University of Kaiserslautern),
in collaboration with Prof. Dr. Tanka Nath Dhamala (Central Department of
Mathematics, Tribhuvan University, Kathmandu, Nepal). On that occasion
students, university professors, and government officials presented a series of
scientific papers with new research results. In 2013, it arranged a seminar on
“Emergency Mitigation Using Optimization and Simulation Methods” led by
Prof. Horst W. Hamacher and Dr. Marc Goerigk, both from University of
Kaiserslautern, and Prof. Dr. Gerta Koester (Munich University of Applied
Sciences); and in December 2014 it organized a workshop on “Learning by
Interactive Knowledge Channels between the University and its environment”
was organized conducted by Prof. Yvonne Zajonzt from the Cooperative State
University Baden-Württemberg (Duale Hochschule Baden-Württemberg)
Heilbronn, who introduced Germany’s well-established dual education
system, which could be highly relevant for Nepal’s education system and
professional formation of the country’s youth. This workshop was attended by
 234

students from different fields and became a basis for initiating future
knowledge channels between universities and external partners.
In April 2016, NEGAAS organized a three day workshop on the topic
‘Nutrition Today: A Struggle Between Obesity and Malnutrition’, in
collaboration with the German nutritionist Dr. Barbara Bjarnason. Its major
aim was to create awareness among the participants, from different areas, for
example universities, governmental offices, and non-governmental
organizations. The topics treated focused on the world food situation,
responsibilities for the hunger in the world, and specific facts about hunger
(micronutrients, causes of obesity, obesity in different parts of the world,
malnutrition and nutritional deficiencies in Nepal, carbohydrates, dietary
fibers, organic food and its benefits, phytochemicals in food, antioxidants,
fats, food additives and others) The workshop transferred knowledge which
can help the participants and their institutions to tackle the problems of
unhealthy diets, obesity, malnutrition and food adulteration better than before.

Meeting with German Nobel Laureate

In 2009, during Dr. Bajracharya’s tenure as Vice Chancellor of (RONAST),
NEGAAS got the opportunity to welcome Nobel Laureate Prof. Dr. Klaus
von Klitzing, Director of Max Planck Institute for Solid State Research,
Stuttgart. He also gave a presentation on “Effects of climate change and
importance of alternative energy source”. On this occasion, the NEGAAS
members got the opportunity to talk with him about his work on integral
Quantum Hall Effect.

Other activities
On several occasions, NEGAAS also had the opportunity to meet top-ranking
German politicians. In 1987, NEGAAS members had the chance to meet with
Chancellor Dr. Helmut Kohl during his state visit in Nepal, and in 1996 an
 235

official get-together with Dr. Roman Herzog, the then president of FRG was
organized in Bhaktapur during his state visit in Nepal.
Throughout 2005, on the occasion of the 100th anniversary of Einstein’s
Theory of Relativity and the 50th anniversary of Einstein’s death, NEGAAS
celebrated the „Einstein Centenary“, a joint initiative with the German
Government. For that purpose it organized a two-days exhibition on “Einstein
and His Contribution to Science and Mankind”, in the National Academy of
Science and Technology (NAST), funded by DAAD; produced a television
broadcast on Einstein’s contribution to research and to the development of
mankind; published several articles about Einstein and his work; and hosted a
seminar.
In 2008, NEGAAS, as a member of the respective initiative’s steering
committee, helped minting a commemorative coin, printing a postage stamp,
and publishing a souvenir issue aimed at celebrating “50 Years of Nepal
German Diplomatic Relations”.
To strengthen social ties also beyond the purely academic sphere, every year
NEGAAS organizes a fellowship picnic where members use to bring their
family members and friends.

6 Challenges and Perspectives

Human capital acquired through international education can play a significant
role in Nepal’s development, where the higher education system faces major
problems in terms of lacking resources, quality, and efficiency (see, e.g.,
Bhusal, 2013). In addition, political instability and recurrent strikes in the
educational sector urge young people to look for possibilities of obtaining
education in other countries. Also, transnational human capital, e.g. in form of
foreign language and intercultural competences, is a resource which is rapidly
gaining importance in the course of on-going globalization processes
(Gerhards, Hans & Carlson, 2014). NEGAAS, as a networking institution,
 236

plays a significant role in strengthening and transferring this capital and thus
enhancing the profits accruing from it.
NEGAAS might also play a role in finding employment for returnees and thus
might even make a meaningful contribution to attracting young academics to
return to Nepal instead of staying in Germany or moving on to third countries
after their graduation in Germany. Although our study does not explicitly
reveal the factors, which are decisive for the decision to return finding
employment can safely be assumed to be an important determinant. However,
most probably not until political conditions in Nepal are more stable will the
country be able to reduce its loss of highly skilled people and to re-attract
more of those who have accumulated valuable human capital abroad.
As mentioned above, apart from NEGAAS, several other smaller associations
of returnees from German universities exist in Nepal. In March 2015,
following an initiative of the German Ambassador in Nepal, the German
Alumni Association of Nepal (GAAN) was founded as an umbrella
organization of the different alumni associations co-existing in the country.
The supporters of GAAN expect that by joining forces the bilateral exchange
of information, ideas, knowledge and programs between Nepal and Germany
will be strengthened. Its success will depend on the extent at which those who
are currently scattered across several associations, some of which have quite a
small number of members, are prepared to co-operate, and how far the social
capital of networks with institutions and personalities in Germany can be
mobilized.
It should have become clear from these lines that NEGAAS, as a returnee
organization, based on the social capital it represents has considerable
potential to further build up Nepal’s human capital as an engine of growth.
This role could be strengthened by bundling together the still scattered
German alumnae organizations and thus enhance their vigour. In this sense,
founding GAAN as an umbrella organization of these associations was an
 237

important first step, on which others should follow. Scarce funding is another
issue to be tackled. In addition to DAAD other organizations should be
mobilized to contribute. For that purpose it is essential that NEGAAS’
potential should be further emphasized and disseminated.

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 239

The Youth and Small Enterprise Self-Employment Fund

(YSEF): A government initiative to offer alternatives to
out-migration

Punya Prasad Regmi

co-authored by Beatrice Knerr

1 Introduction
For decades Nepal’s governments have been struggling against poverty and
unemployment. However, its achievements are moderate and far below the
envisaged targets. Therefore, to secure their livelihoods, millions of youths
have migrated abroad for work, and most likely this process will continue at
least over the 2020’s, depriving the country of labour force in its the most
productive age. Realizing this development, the Nepalese Government in
2009 introduced the Youth and Small Entrepreneur Self Employment Fund
(YSEF) with the intention to support young jobless people in becoming self-
employed. For this purpose, YSEF provides funding through banks, financial
institutions, and cooperatives.
After briefly introducing the employment situation of young people in Nepal
(in section 2) this article gives an overview of YSEF’s mission, visions,
strategies, objectives, working modalities, and experiences as well as general
prospects of using funds through cooperatives (section 3). Finally it draws
conclusions with regard to perspectives and suggestions for further
improvements (section 4).
 240

2 Youth underemployment and migration

Concept and definition of “Youth”

In the present context, various definitions of “youth” are relevant. In general,
the definitions and nuances of the term ‘youth’ vary from one country to
another, depending on socio-cultural, institutional, economic and political
conditions. The Government of Nepal in 2010 defined youth as people aged
16 to 40 years, although the Parliamentary Secretariat for Research,
Innovation Youth and Sport (PSIYS), defines those in the age group 13 to 30
as its target group (PSRIYS, 2015). Nevertheless, a number of youth
organizations in the country use the UN definition, which includes persons
aged 15 to 24 years old (UN, 2016a)100, or define youth as people aged 15-29
or even 15-35 (YUWA, 2012). Specifically with regard to Nepal, the UN
considers the population within the age group 15–29 years as youth (UN,
2016b)101. In 2014 almost 30% of the country’s population was in this age-
group, making up around half of those in working age. Nepal’s population
pyramid demonstrates that the proportion of people in working age (15 to 59
years old) is still increasing, with half of the population being younger than 24
years (CIA, 2016) (see Fig.1).

100
The UN, for interregional statistical consistency, defines ‘youth’ as those persons
between the ages of 15 and 24 years. All UN statistics on youth are based on this
definition, as illustrated by its annual yearbooks of statistics (UNESCO, 2016).
101
Nepal’s 2010 National Youth Policy defines youth as “women, men and third gender
persons aged 16-40 years old” (Demokratrie & Dialog, 2014). Gupta, Kumar & Katwal
(2011; cit. from Demokratie & Dialog, 2014) describe the controversial discussion around
that issue with civil society members, advocating for a lower upper age delineation (ex. 29
years) (Youthpolicy.org, 2017).
 241

Fig. 1: Population Pyramid of Nepal, by Age and Gender

Source: CIA (2017)

The country’s official unemployment rate shows a slightly increasing trend: it

was indicated by 2% in 2000, and 3.2% in 2016 (World Bank, 2017)102. More
important, yet, is the fact that Nepal is burdened by wide-spread youth
underemployment which becomes obvious by young people being stuck in
temporary, part-time, casual and insecure jobs with poor and hazardous
working conditions and low legal protection (UN, 2016). In particular those
who enter the labour market with low skills, and limited or no formal
education, are at major risk of underemployment throughout their working
lives. Young women, in addition, experience gender discrimination, are often
forbidden to work outside the home by their families, and are pressured into
subsistence activities.
Basic underlying causes of Nepal’s youth underemployment are, on the
labour supply side, families’ poverty, hunger and deprivation which drive
people to start working at an early age rather than investing time into
102
Official unemployment rates are considerably higher in urban than in rural regions due
to the higher share of formal employment and hence higher registration of unemployment.
 242

education and building up of human capital. This problem is more prevalent

among disadvantaged and discriminated communities in rural areas than in
more urbanized centres. On the labour demand side, neither the domestic
private nor the public sector offer sufficient productive employment for all, or
even the majority, of those entering the labour market. Moreover, the
country’s education system is characterized by a huge discrepancy between
trends and prospects of labour market requirements on the one hand, and
actual supply of skills and competences by the domestic youth on the other
hand (UN, 2016). Nepal’s young people are confronted with a lack of access
to relevant education and training, and a deficiency of information.
At the same time tremendous rural-urban, gender and geographic differences
can be observed. Employment opportunities are mainly cantered in urban
areas, where, however, only a fifth of Nepal’s youth are living (UN, 2016). In
particular during the country’s civil war, from 1996 to 2006, young people
from conflict-ridden areas were largely excluded from receiving adequate
education and training; their mobility to obtain employment was restricted;
and traditional social systems that previously ensured young people basic
livelihood options and employment were devastated (UN, 2016).
In order to improve the occupational prospects of young people, the GoN,
with support from ILO, in 2009 prepared a “National Plan of Action for
Youth Employment 2010–18” to address various relevant youth issues and
identify effective activities to enhance their human capital, provide support in
starting a business or in finding appropriate employment, including also the
assessment of possible outputs. It includes a Labour Market Information and
Analysis System to establish better linkages between market developments
and training institutions that will facilitate young people’s choices to invest in
a particular career path (UN, 2016; Agrawal et al., 2014).
Although, as compared to other low-income countries, Nepal’s youth has a
considerably higher level of schooling, with more than 10% of the youth
 243

having tertiary education (Table 2), it has, at the same time, with around 20%,
also a much higher rate of youth unemployment (Sparreboom & Staneva,
2014103). The unemployment rate among youth in Nepal is 9.8% for those
with primary level education or below and 13.2% for those with secondary
education or more (Sparreboom & Staneva, 2014).
The vulnerable employment rate among young people has remained
permanently high over the years; between 1991 and 2014 it dropped just from
76% to 70% (Sparreboom & Staneva, 2014:11).

Table 2: Educational attainment of youth, according to gender

level total male female
Less than primary 19.7 17.4 22.4
Primary 33.0 35.0 30.7
Secondary 36.6. 33.3 40.5
Tertiary 10.7 14.4 6.4
Source: Sparreboom and Staneva, 2014

Migration
Migration – internal as well as international - has been a common
phenomenon in Nepal since decades, and in some regions since centuries,
essentially driven by the search for better living conditions for the migrant
himself/herself as well as for his/her family. Internal migration processes
include individual movements as well as migration of whole households from
one geographical place to another, whereby the general trend is shifting from
the Mountain to the Hills; the Mountains and Hills to the Terai; and from rural
to urban areas. Hence, the share of the population living in the Terai has
permanently increased while that of the Hills and Mountains has declined

103
The source of data published by Spareeboom & Staneva (2014) is the School-to-Work
Transition Survey carried out in 28 countries over 2012–2013. Youth is defined as people
between 15 and 24 years of age.
 244

(Table 1); between the 1952/54 and the 2011 censuses, it increased from
35.2% to 50.3%. The higher population pressure in Terai is also due to
immigrants from India who arrive across the open border from east, south and
west. This development has major implications with regard to resource
ownership and utilization, households’ livelihoods, and follow-up migration.

Table 1: Population by Ecological Zones and Census Year

Year Mountain Hill Terai Total
1952/54 n.a. n.a. 2,906,637 (35.2) 8,256,625
1961 n.a. n.a. 3,421,699 (36.4) 9,412,996
1971 1,138,610 (9.9) 6,071,407 (52.5) 4,345,966 (37.6) 11,55,5983
1981 1,302,896 (8.7) 71,63,115 (47.7) 6,556,828 (43.6) 15,022,839
1991 1,443,130 (7.8) 8,419,889 (45.5) 8,628,078 (46.7) 18,49,1097
2001 1,687,859 (7.3) 10,251,111 (44.3) 11,212,453 (48.4) 23,15,1423
2011 1,781,792 (6.7) 11,394,007 (43.0) 13,318,705 (50.3) 26,494,504
n.a.=not available
Note: Figures in parenthesis indicate %age of the row total.
Source: CBS, 2003, 2007, and 2013.

In addition, every year more and more people have left the country to earn an
income abroad. While from 1961 to 2011, the total population increased by
281%, the number of out-migrants soared up by more than the double (585%).
Between 2008/09 and 20013/14 the annual number of labor permits issued by
the Government’s Department of Foreign Employment (DFE) shows a 137%
surge (DFE, 2014), and in 2013, on average, more than 1000 young people
were out-migrating every day from Nepal (DFE, 2013, cit. by Neupane,
2015). Increasingly, also young people are leaving who actually are not
unemployed, following a kind of “bandwagon effect” driven by social
networks and feelings of relative deprivation, as has been observed in many
other parts of the world (Stark & Taylor, 1989).
 245

Their remittances are considered as the country’s most important source of

foreign exchange. However, in addition to the hardships of separation, there
are serious negative development draw-backs for the migrants as well as for
the rest of the population. A major one is that the country increasingly lacks
young labour force mainly in rural areas and in the agricultural sector. The
fact that which will further fuel overseas labour migration the proportion of
people in working age is still increasing will further fuel overseas labour
migration (see Fig.1 above). The majority of the registered international
migrants in FY 2010/11 were between 15 and 29 years old (50.3% of the total
migrant population); 34% were between from 30 to 44 years; 7% from 45 to
58 years, 8% below 15; and 1% above 59 (calculations based on NLSS
2010/11 datasets; cit. from Sijapati et al. 2015). The highest percentage of
female international migrants is found in the youngest working age group of
15 to 29 years with 19.3% of all females in that age group being international
migrants.
In 2010, 55.8% of those between 15 and 29 years, 45.8% of those between 30
and 44 years, and 7% of those between 45 and 59 years were absent from
their households, i.e. were international or internal migrants according to the
NLSS 2010/11 data sets (Sharma et al. 2014).
In addition, the migrant at their destinations, are subject to harsh working
conditions. There are many cases of deaths of migrants abroad implying wide-
spread concerns among the Nepalese population. Among the negative
consequences of out-migration, the most important was found to be the high
risks of catching HIV/AIDS infections, not only for the migrants themselves
but also for their families and wider communities at home (WFP/Nepal and
NDRI, 2008).
In geographic terms, international migration from Nepal can be sub-divided
into two categories with quite different characteristics and implications: that
to India, on the one hand, and that to other countries, in particular migration
 246

of young workers to Malaysia, South Korea, Qatar, Saudi Arabia and other
countries of the Middle East which has significantly increased over the early
21st century, and in terms of remittances brings significantly higher benefits
than that to India (FSMTF/NPC, 2010). Migration to India usually takes place
during Nepal’s lean agricultural season; the migrants earn some cash and
bring it back home upon their return at the planting and harvesting seasons,
together with goods for the daily needs. In a survey among migrants to India,
the World Food Program (WFP) Nepal and the Nepal Development Research
Institute (NDRI) found that more than 70% of the respondents were poor to
very poor, and more than 94% were male (WFP/Nepal and NDRI, 2008), and
their major reason for migrating was reported to be food insecurity and lack
of employment. Therefore, this study strongly recommended supporting the
creation of stable domestic employment.

3 YSEF’s visions, objectives, concepts and funding104

Just as elsewhere in the world, rapid economic growth without involving the
youths is hardly possible in Nepal. To this end, YSEF was established in 2009
by the first Republican Government of Nepal (GoN) under the Ministry of
Finance (MoF) as one of its Priority-I programs105, after the great political
change in 2006, in the course of which the constitutional monarchical
multiparty system was replaced by a by federal democratic republican one.
The declared overriding aim of this step was to support self-employment of
unemployed youths, by mainly targeting disadvantaged and displaced

104
The YSSEF website where further information can be obtained is
http://ysef.gov.np/site/index.php/about-us.
105
The GoN has three categories of development programs: Priority-I, Priority-II and
Priority-III. The Priority-I has to be monitored directly by the MoF itself with highest level
of attention.
 247

households, and those of members of war victims and martyrs106. For that
purpose, it provides low-interest collateral-free loans through banks, financial
institutions and cooperatives to young people, along with different training
modules, such as professional orientation, skills, capacity building and
institutional training. Creating chances of self-employment for unemployed
youth inside the country promises to be an effective coping strategy against
migration. The suitability of YSEF in this respect becomes visible when going
through its objectives, decision making and implementation modalities.

Vision, core values, and objectives

YSEF’s visions are two-fold: First, it is committed to improving the lives and
economic welfare of young unemployed and disadvantaged young Nepalese.
It does so by partnering with banks, financial institutions and cooperatives to
channel loans, managing effectively YSEF human and capital resources,
promoting team work and open communications with YSEF stakeholders.
Secondly, at the same time it aspires to become a global leader by its
innovative youth self-employment program that fosters Nepal’s rapid
economic growth and sustainable development, which should become an
exemplary movement to cope with poverty and unemployment.
Under that agenda, YSEF’s stated general objective is to explicitly provide
opportunities for unemployed youths, focusing on destitute, women, Dalits107,

106
“Martyrs” are persons who died in the civil war or in protests, for example against Monarchy, and
whom the government has declared as national heroes.
107
Dalits are the lowest caste in Nepal. They are the descendants of the Indian aboriginal
people and – in the Hindi religion – are categorized as “untouchables”. Dalits in Nepal are
a historically disadvantaged community at the bottom of the social structure and excluded
from the national development mainstream due to the caste system (NNDSWO, 2017).
They lag far behind in their income, education and other human development indicators, in
rural regions even more than in cities (Paria & Lovett, 2016), and comprise the poorest
communities. Their land holdings are small and landlessness is extremely wide-spread
among them. With 33.8%, their literacy rate is much lower than the national average of
54%. 52% of the Hill Dalits and 47% of the Tarai Dalits have not been to school,
 248

the marginalized groups of Dhimal, Rajbansi, indigenous nationalities 108 and

people from other oppressed caste groups, conflict victims, people with
disabilities and handicaps, members of war victims’ and martyrs' families,
and youths with traditional skills109. The instrument used for attaining these
objectives is to provide collateral-free loans of up to NRs. 200,000 for an
individual and up to NRs. 5,000,000 for a group (of maximum 25 persons) at
below-market interest rates, i.e. interest rates which are less than one usually
has to pay to the bank when taking a loan. Loans are offered for different
service sectors; agriculture and small enterprises related to commercial
farming, animal husbandry; agro- forest-based industries: home-stay, precious
stones; and operating rickshaws and push-carts in urban areas whereby
projects utilizing local raw materials, skill-oriented programs, and producing
materials showing market potentials are prioritized. Special encouragement
has been given to investments into the projects "One Village One Product”
(OVOP) and “One Cooperative One Main Identity"(OCOMI)110.

compared, according to the NLSS, 2004, which was the case for only 12% of Brahmans,
Chhetris and Newars. Their life expectancy is nine years below the national average, and
infant mortality as well as under-five mortality are considerably higher than the national
average (NNDSWO, 2017).
108
Indigenous nationalities use to pursue a nomadic life style, separate from the common
society with less communication to current government and facilities. E.g. Chepangs and
Kushunda are groups of them.
109
Traditional skills include those transferred from parents to their children or from the
local community to the new generation. Many communities have specific skills, for
example making bamboo handicrafts, goldsmith, carpentry, carpets, or Dhaka (traditional
Nepalese textile) weaving.
110
OVOP (“One Village One Product”) is a government program to make villages more
specialized in one product so that they will supply enough volume to compete in the
market, and also to make use of the comparative and competitive advantage of the location.
OVOP promotes, e.g., oranges, coffee, and rainbow trout production.
 249

Funding
YSEF is funded by the government budget and by funds received through
different banks and other financial institutions. The government budget covers
management, training, and monitoring costs, the premium for due insurances,
and 60 % rebates on the interest to be paid by the borrowers if reimbursement
is made on time. It also has been used to distribute NRs 500 per borrower to
the partner banks, financial institutions, and cooperatives as an incentive to
cooperate. The banks and financial institutions are obliged to allocate one-
third of their total deprived sector loan to YSEF at an interest rate fixed by the
government. Thus, receiving funds does not seem to be a binding constraint
for YSEF; however, the efficiency of using them successfully for the target
group is of central concern.

Decision making
The decision making body of YSEF is its board, headed by the Minister of
Finance; the decisions made by this board are to the implemented by the
Executive Vice Chairman (EVC) through the YSEF secretariat (Fig. 2). By
its rules and regulations, once YSEF receives a loan from a bank or some
other financial institution, it is to be passed to the benefitting unemployed
youths via different banks, financial institutions and cooperatives, and not
directly transferred to the final beneficiaries. The process of selecting these
institutions is rigorous and includes an announcement for proposals at least
once per year; the designation of the projects to be supported by a selection
committee, considering the set criteria and standards developed by YSEF; and
finally the approval of the loan by the EVC upon the recommendation of an
internal task force and the evaluation committee headed by the Executive
Director.
The individual funds are provided in three instalments of 30%, 30%, and 40
% of the total sum respectively. Those who have used the first instalment
 250

properly are eligible to get the second one; similarly, only those having used
the first and second instalments adequately as per YSEF’s rules and
regulations will receive the third portion. In addition, the borrowers who
properly used all payments of the first phase are eligible to get a 150% higher
loan for a second phase.

Fig. 2: Organigram of YSEF’s functional modalities

YESEF Board

YSEF Secretariat

Target group: Insurance

˜ Banks Company
Unemployed youth to become self-
˜ Financial employed
Institutions

District Cordination and Monitoring Committee

The whole process of loan allocation, use and repayment is subject to close
supervision. In order to assess whether loans are provided as per YSEF rules
and regulations, a strong monitoring mechanism is in place which is mainly
carried out by a District Coordination and Monitoring Committee at the
grassroots level and the Monitoring Section of the YSEF Secretariat.
 251

Implementation.
In the beginning, YSEF loans were intended to be channeled only through
banks and other financial institutions. However, as too few of these
institutions agreed to participate, the program could not reach the large
number of target persons which was previewed. Therefore, the Council of
Ministers decided to add an amendment to the existing YSEF rules, saying
that funds could also be channelled via cooperatives. As a result, between
2009 and end of 2015, more than 620 cooperatives and 20 banks and financial
institutions had handled YSEF loans to lift more than 27,000 unemployed
young people to self-employment. The total loan sum amounted to NRs 1.63
billion in YSEF’s first FY, without any disbursement, whereas in FY 2014/15
the loan was NRs 3.83 billion, with NRs 2.45 billion of disbursement (Table
2). The share of loans disbursed out of the total available amount of year end
loans has increased steadily since the establishment of YSEF (Fig. 3). While
just 2.7% were disbursed in 2010/11, 64% were handed out in 2014/15. In a
currently year unused available loan amounts are considered for providing
loans in the next year’s budget.

Table 2: Year End Loan Amount and Disbursement

end year loan disbursed % disbursed

Fiscal Year (billion NRs) (billion NRs)
2009/10 1.63 0 0
2010/11 3.72 0.10 2.7
2011/12 3.76 0.23 6.1
2012/13 3.83 0.79 20.6
2013/14 3.82 2.10 56.0
2014/15 3.83 2.45 64.0
Source: YSEF, Finance Section, unpublished data

Based on their capacity, cooperative in Nepal can be categorized as Primary

(limited to local level), District (having mandate to provide service in the
respective district), and Central (having authority to provide service all over
 252

the country). According to YSEF’s experiences, in terms of timely

disbursement and repayments the primary level cooperatives have performed
better than the district and the central level ones. As of May 2015, more than
600 primary level cooperatives in 73 districts (i.e. all districts except of
Manang and Mustang) had used more than 70% of the total loan
disbursements made available by YSEF until 2015, while the repayment rate
was around 90%, demonstrating the strong success of these cooperatives. The
reason for that favourable outcome is the close monitoring and supervision
which is possible through primary cooperatives because their catchment areas
are smaller and more manageable than those of central banks and
cooperatives, and also because they are closer to their clients.111
Financial institutions, in particular banks, are mainly located in large market
centres and urban city areas, and their services do not reach out to far-off rural
areas. Cooperatives, in contrast, are found all over the country, even in quite
remote villages. Therefore, YSEF loans provided through cooperatives more
easily reach unemployed youths residing at different places, from Terai to
Himalaya, and from rural areas to urban city centres. Another advantage of
channelling loans through cooperatives is that idle money stored at central
banks and financial institutions can be directed to previously unserved remote
areas and people, thus enhancing the flow of capital from urban centers to
remote villages where it can contribute to reduce poverty and unemployment
and to cope with the increasing youth out-migration. Thus, cooperatives may
be used as effective stepping stones towards balanced and sustainable
economic and social transformation of the country. From this perspective,
providing loans through primary cooperatives is a most effective element of
YSEF. Many more commodities might be produced by mobilizing rural
youths through cooperatives, and many more ideas are ventilated by YSEF,

111
Internal information by YSEF.
 253

for example by commercial goat keeping or poultry farming. To further back

up its vision, YSEF has promoted the slogan “One Cooperative - One
Identity”.
For the FY 2015/16, YSEF has targeted an additional 30,000 young people,
since it has already established a strong basis by supporting almost the same
number of self-employed in 73 districts. Although the remaining two districts,
Manag and Mustang are economically relatively better off, initiatives are
already taken to reach the unemployed youths of these districts as well.
Box 1 describes the case of a former migrant who was enabled to settle in his
home region on the basis of an YSEF loan which helped him to start a poultry
farm.
 254

Box 1.

How an YSEF loan brought positive change in the economic and social status
of Mr. Chhetra Bahadur Thapa.

Unable to find any income generating opportunities in Nepal, Mr. Chhetra

Bahadur Thapa from Jaharkot, Dailekh, spent about five years of his life in
Ahamdabad, India, where he worked as a waiter in different hotels. He recounted
that he learnt about the death of his father only after two months and then
travelled to Nepal to perform the required rituals. Afterwards he had to overtake
additional economic burdens and therefore was planning to move to India again
for earning some money. Luckily, he got a chance to participate in a meeting of
the Primary Cooperative “Gothpanda Krishi Cooperative Limited” and learnt that
it had received funds for unemployed youths. He immediately applied for
membership and an YSEF loan. He then received a credit of NRs 200,000 and
with this he started his poultry farm.

At the time of the interview, he was saving NRs 20,000 to 25,000 per month,
which was left after the deduction of his variable costs. Some family members are
also engaged on his farm, and in addition a young man is employed as wage
labour. To make use of the fertilizer supplied by his poultry farm, he is now
planning to start off-season organic vegetable farming by renting land since he
does not possess own land. The income from poultry farming is covering all
household expenses including the children’s education and health treatments. He
used to save only NRs 2000 per month when he had worked in India, now, he is
not only earning more than NRs 20,000 per month but also happily living with his
family and being able to provide employment to his relatives and to established
himself as a successful business person, thus gaining a higher social status.

Source: Extracted from Report in YSEF Bulletin, No. 4, Year 1, June, 2015.
 255

Research
Research is another of YSEF’s the priorities. Through this it identifies areas
in which unemployed youths can potentially develop their entrepreneurship in
order to become self-reliant. With this objective, from its beginning, YSEF
has actively undertaken and/or supported research on various areas of self-
employment, like, for example, the projects: identification of potential pocket
areas of livestock production; prospects for self-employment of indigenous
people and members of marginalized castes/ethnics; employment/self-
employment and entrepreneurship of Dom and Musahar112 Community; youth
employment market survey of Kavre Kathmandu, Nuwakot and Dhading
District; perspectives of migrating and none- migrating Dalit Youths on Self-
Employment of Nepal; and professional chilly farming techniques (and the
same for vegetables, mushrooms, garlic, banana, poultry, fish, goat, pig cow,
beekeeping, and cardamom).

4. Concluding Remarks
YSEF has turned out to be practicable and successful, and it demonstrates
clear potential to reduce out-migration of young people by providing
employment at home. In order to achieve YSEF’s vision, mission, and
objectives it is to be run as an autonomous body under its separate Act which
is sufficiently recognized. In order to become an innovative global leader in
youth self-employment programs, as envisaged, YSEF should further expand

112
Musahar and Dom are sub-groups among the Dalits. “Among the Dalits, the Dom and
Musahar communities are in the worst situation. Landlessness, lack of citizenship,
illiteracy, poverty, child marriage, dowry system, social boycott by non-Dalits, . etc. are
the major issues of Terai Dalits.“ (NNDSWO, 2017). Traditionally, they have been defined
by occupations with low social prestige, like alms collecting, grave digging, drum-beating,
dancing, or making bamboo baskets. The Doms are considered as a depressed caste or
'untouchable' community in Nepal. In particular the Musahar community suffers from
abject poverty and low education (Karna, 2008).
 256

considerably by developing regional and district offices and diversify its core
programs related to training, loans, and monitoring by building strategic
partnerships with foreign donors, private companies, institutions of higher
education, and non-government organizations (NGOs). Moreover, in order to
use YSEF loan more efficiently, additional capacity building in cooperatives
in remote rural areas is essential. With this strategy, YSEF can improve its
role as provider of an effective coping strategy against youth out-migration
from Nepal.

References
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Adhikari, Srishti; and Deborah Tsuchida (2014): Youth and Public Policy in Nepal.
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Gesellschaft für Internationale Zusammenarbeit (GIZ). Kathmandu.
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(2014): State of Migration in Nepal. Centre for the Study of Labour and Mobility.
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Sparreboom, Theo and Anita Staneva (2014): Is education the solution to decent work for
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 259

Notes on Contributors113

Siegfried Bauer is a professor of economics, specialized in agricultural

economics and rural development. He has retired from the University of
Gießen where he has headed the department of Project and Regional Planning
in the Instate of Institute of Agricultural and Food Business Operations. He
graduated from the University of Bonn where he also did his PhD and his
habilitation promotion. He published extensively on various topic related to
rural development, like agricultural environment programmes, water issues
and sustainability of rural livelihoods. For many years he also headed and
coordinated the PhD Program „Agricultural Economics and Related
Sciences“sponsored by the German Academic Exchange Service (DAAD).

Béatrice Knerr is a professor of development economics, affiliated to the

University of Kassel, Germany, where, until 2015, she was heading the
Department of Development Economics, Migration and Agricultural Policy
(DEMAP). Afterwards she has served as guest professor at the Universidad
Autonoma de Yucatan (UADY) in Merida, Mexico, and at the College of
Economics of Hue University, Vietnam. Presently she is on contract with the
University of Malang, Indonesia, where she is joining research projects on
rural development and teaching various modules in the Economics Faculty.
As an expert in the implications of labour migration on the development of
low- to middle-income countries she has published, edited and co-edited
around 30 books and more than 100 journal articles and book chapters.

113
In alphabetic order.
 260

Amina Maharjan is an Agricultural Economist working in the field of

human mobility and migration and its linkages with rural and urban
livelihoods. Her main mandate is to work on migration and development,
including studies on remittance use, return and reintegration, women
migration, diaspora engagement and migration and climate change adaptation.
She made her Ph.D in Agriculture at the University of Giessen, Germany.
Afterwards she worked as team leader of the project “Safer Migration” and
also as freelancer, mostly conducting studies related to human mobility and
migration. Since 2015 she has joined ICIMOD as Livelihood Specialist, and
since 2006, she is focusing on labour migration and has published several
peer reviewed publications in that area. She has given a guest lectures at
Universities in Switzerland, Myanmar, Nepal and Australia.

Sanjeeb Mahrjan is a graduate of Goettingen/Kassel University, Germany,

International Master Program 'Sustainable International Agriculture' (SIA).
He has been working as district agro enterprise specialist for High Mountain
Agribusiness and Livelihood Improvement (HIMALI) Project in Solukhumbu
district. Some of the notable achievements from the involvement include
establishment of varying number of farms in Kiwi, Swertia chirayita,
Yak/'Chauree', and Handmade paper, among others. The project has
significance in retaining mountain people from migration and creating wider
economic opportunity within the region. His research interests extend to
different disciplines of development economics in relation to agriculture.
 261

Ranjita Nepal obtained her M.Sc. in Regional and Rural Development

Planing (RRDP) from the Asian Institute of Technology (AIT), Thailand, in
20017. Her professional experience started from various international and
development organizations, such as UNDP and IOM in Nepal. In 2012 she
obtained her Doctoral Degree from the Department of Development
Economics. Migration and Agricultural Policy (DEMAP) of University of
Kassel, Germany, with the support of a scholarship by the German Academic
Exchange Service (DAAD). Currently she is working as a freelancer based in
the USA. Her research interests include socio-economic aspects of labour
migration, remittances and regional development.

Punya Prasad Regmi is a Professor of Agricultural Economics, formerly

employed at the Trivibhuvan University, Nepal. He has also worked as a
Chief Economic Advisor of the Ministry of Finance; and as Vice Chairman of
the Youth and Small Entrepreneur Self-employment Fund (YSEF). He was a
visiting scholar at numerous prestigious international academic institutions, in
particular a International Consultant and Researcher at the Asian Institute of
Technology (AIT) in Thailand; a Visiting Professor in Hiroshima University,
Japan; a Research Fellow at the United Nations University in Japan; Visiting
Researcher in Graduate School of Agriculture and Agricultural Life Sciences
at the University of Tokyo, Japan; and Visiting Scholar at the Department of
Agricultural Economics of Eidgenössische Technische Hochschule (ETH) in
Switzerland. He is currently serving as an Adjunct Professor, at the
Agriculture and Forestry University, Nepal and as Senior Researcher in Nepal
Development Research Institute.

Rosy Pun graduated from the Asian Institute of Technology (AIT) with a
master thesis on the social and Psychological Implications of Labor Migration
in Rural Areas of Nepal.
 262

Roshana Shresta holds a PhD from Albert-Ludwig University, Freiburg in

Germany which she made in 1979 on the topic “A comparative light and
electron microscopics developmental study of haematopoieses in the wild
type and two blood tumour mutants of Drosophila melanogaster” (in which
area she later on published several papers in international journals) and a
master of science from Tribhuvan University, Nepal, with a specialization on
Entomology. After completing her master degree she worked as an Assistant
Lecturer in Zoology at the Institute of Medicine of Tribhuvan University, and
during her PhD research as a Scietific Assistant, ALbert-Ludwig University,
Freiburg in Germany. After her return to Nepal she was employed as a
lecturer in Zoology at the Central Campus of Tribhuvan University, and also
in the Administration, Embassy of the Federal Republic of Germany. She is a
life member of the Nepal German Academic Association (NEGAAS) where
she acted as the Vice President, from 2008-2011 and as the President from
2012 to 2016.

Karishma Wasti is a versatile agriculture and rural development expert with

excellent academic background in Agricultural Engineering and a Masters in
Regional and Rural Development Planning. Her major areas of expertise and
technical knowledge are on operational projects and research in South Asia,
covering value chain development, community driven development, climate
resilient livestock production systems, and integrating food security, nutrition
and jobs creation in development projects. Ms. Wasti has experience of
working with national and international organizations, research institutes and
is currently working with a multilateral development bank.
Series International Labor Migration
edited by Prof. Dr. Béatrice Knerr*

Vol. 1 Nadim Zaqqa (2006): Economic Development and Export of Human Capital.
A Contradiction? The impact of human capital migration on the economy of
sending countries. A case study of Jordan.
Kassel, ISBN 978-3-89958-205-5

Vol. 2 Volker Hamann (2007): The Impact of International Labor Migration on

Regional Development: The Example of Zacatecas, Mexico.
Kassel, ISBN 978-3-89958-251-2

Vol. 3 Béatrice Knerr (Ed.) (2006): Vorweggenommene Erweiterungen:

Wanderungsbewegungen aus Grenzgebieten in die EU.
Kassel. ISBN 978-3-89958-281-9

Vol. 4 Germán A. Zárate-Hoyos (Ed.) (2007): New Perspectives on Remittances

from Mexicans and Central Americans in the United States.
Kassel, ISBN 978-3-89958-256-7

Vol. 6 Izhar Ahmad Khan Azhar (2008): Overseas Migration and its Socio-Economic
Impacts on the Families Left Behind in Pakistan. A Case Study in the
Province Punjab, Pakistan.
Kassel, ISBN 978-3-89958-366-3

Vol. 7 Jörg Helmke (2010): Remittance-led development: Rebuilding old

dependencies or a powerful source of human development? A view on Latin
America.
Kassel, ISBN 978-3-89958-968-9

Vol. 8 Béatrice Knerr (Ed.) (2012): Transfers from International Migration: A Strategy
of Economic and Social Stabilization at National and Household Level.
Kassel, ISBN 978-3-86219-208-3

Vol. 9 Cristian Vasco (2011): The Impact of International Migration and Remittances
on Agricultural Production Patterns, Labour Relationships and
Entrepreneurship. The Case of Rural Ecuador.
Kassel, ISBN 978-3-86219-086-7

Vol. 10 Rasha Istaiteyeh (2011): Economic Development and Highly Skilled

Returnees: The Impact of Human Capital Circular Migration on the Economy
of Origin Countries. The Case of Jordan.
Kassel, ISBN 978-3-86219-084-3

Vol. 11 Béatrice Knerr (Ed.) (2015): Asian students in Germany. Contexts of their
Studies, Living Conditions and Future Plans.
Kassel, ISBN 978-3-7376-0006-4
Vol. 12 Wildan Syafitri (2012): Determinants of Labour Migration Decisions. The Case
of East Java, Indonesia.
Kassel, ISBN 978-3-86219-314-1

Vol. 13 Xi Zhao (2014): Return Migration and Productive Employment in Rural China.
Kassel 2014, ISBN 978-3-86219-882-5

Vol. 14 Ranjita Nepal (2013): Remittances and Livelihood Strategies. A Case Study
in Eastern Nepal.
Kassel, ISBN 978-3-86219-428-5

Vol. 15 Rumin Luo (2014): Becoming Urban: State and Migration in Contemporary
China.
Kassel, ISBN 978-3-86219-656-2

Vol. 16 Agnes Pohle (2014): Remittances, Farm Investments, Land Use,

and Water Consumption: Interdependencies in Kerala, India.
Kassel 2014, ISBN 978-3-86219-537-4

Vol. 17 Béatrice Knerr and Fan Jieping (Eds.) (2015): Chinese Diasporas in Europe.
History, Challenges and Prospects.
Kassel 2015, ISBN 978-3-86219-942-6

Vol. 19 Tlatlik, Rebecca (2016): Place-related factors, employment opportunities and

international students’ migration intention. Evidence from Göttingen,
Germany.
Kassel 2016, ISBN 978-3-7376-0036-1

Vol. 20 Mahmood, Sadaf (2017): Human Capital, Occupational Status, and Social
Integration of Pakistani Immigrants in Germany: Gender Perspectives
Kassel 2017, ISBN 978-3-7376-0180-1

Vol. 21 Zhang, Kaikai (2016): Berufserfolg und Bleibeabsichten hochqualifizierter

Chinesen in Deutschland
Kassel 2016, ISBN 978-3-7376-0186-3

Vol. 22 Knerr, Béatrice (Ed.): International Labor Migration and Livelihood Security in
Nepal. Considering the Household Level
Kassel 2017, ISBN 978-3-86219-944-0

*) Department of Development Economics, Migration and Agricultural Policy (DEMAP),

University of Kassel
Steinstr. 19
D-37213 Witzenhausen

knerr@uni-kassel.de
 22

International Labor Migration 22

As measured by its per-capita income, Nepal is one of the poorest coun-
/// Series edited by Béatrice Knerr ///

International Labor Migration and Livelihood Security in Nepal

tries in the world, with large parts of its population trapped in poverty
within a stunning, but difficult to control natural environment. Under
these conditions, since the wake of the 21st century, international labour
migration and the associated remittances of large amounts of foreign
exchange have rapidly gained influence on the country’s economic and
social development, triggered by internal disturbances, in particular eco-

Considering the Household Level

nomic downturn and political upheavals, as well as external dynamics
which boosted an uprising international demand for unskilled labour.
While there is hardly any basic dissent about the short- to mid-term
po­sitive growth effect for Nepal’s economy, surprisingly little is known
about the consequences of this form of livelihood security at the indi-
vidual household level, apart from some anecdotal evidence, although
neither policy makers nor NGOs may effectively craft their strategies
without considering this phenomenon. Béatrice Knerr (Ed.)
This book was developed from an Alumni Workshop held in Kathmandu
in 2015, where, focusing on this knowledge gap, wide-ranging original
research about the consequences of family members’ absence and the
receipt of remittances was presented. Moving on from this starting
point the authors further elaborated their work to make it accessible to
a broader public, and exploitable as a resource for policy making and
follow-up research.
International Labor Migration
I addition, this volume includes detailed facts and figures about out-
migration from and inflow of remittances to Nepal. With a view to
and Livelihood Security in Nepal
long-term development implications of international migration it also
considers the gain of knowledge and access to international academic
networks brought into the country by returned scholars.
Considering the Household Level
The editor of the volume, Béatrice Knerr, is a professor of development
economics, affiliated to the University of Kassel, Germany, where, until
2015, she was heading the Department of Development Economics,
Migration and Agricultural Policy (DEMAP). Afterwards she has served
as guest professor at the Universidad Autonoma de Yucatan (UADY) in
Merida, Mexico, and at the College of Economics of Hue University,
Vietnam. Presently she is on contract with the Brawijaya University
of Malang, Indonesia, where she is joining research projects on rural Béatrice Knerr (Ed.)
development and teaching various modules in the Economics Faculty. As
an expert in the implications of labour migration on the development of
low- to middle-income countries she has published and edited around
30 books and 100 journal articles and book chapters.

ISBN 978-3-86219-944-0

kassel
9 783862 199440 university
press